KR pension scheme on brink of collapse over irregularities

PHOTO/JARED NYATAYA Furniture belonging to the Kenya Railways Staff Retirement Benefits Scheme is loaded onto a lorry after auctioneers raided their offices in Nairobi for failing to pay a debt of Sh9.7 million arising from a suit filed by one of the retirees who sued trustees of the scheme for not paying their pension on time, on February 10, 2012. 

By SUNDAY NATION TEAM newsdesk@ke.nationmedia.com

The disposal of a Sh20 billion estate to pay Kenya Railways retirees is at the heart of a controversy that threatens to halt their monthly payments.

An audit report seen by the Sunday Nation cites massive irregularities that could sink the Kenya Railways Retirement Scheme.

Insiders say the scheme has only a three-month reserve after which retirees will not receive their monthly cheques.

As it stands, the source said, the scheme pays out Sh56 million to pensioners every month.

The scheme was set up by Kenya Railways when it went broke and decided to transfer some of its prime property to a board of trustees who would sell the property over time to pay out pensions to more than 9,000 retired railway workers.

Gross misconduct

 The audit report, which was prepared by the Retirement Benefits Authority (RBA) and handed over to the Kenya Railways Staff Retirement Benefits Scheme board of trustees, mentions gross misconduct and conflict of interest by a majority of the nine-member board chaired by Beryl Odinga.

The chair, together with three of its members – Ms Caroline Nyororo, Mr Ephantus Muriithi Githui and Mr Mathews Kipchumba – were recently taken to court on charges of abuse of office.

They were accused of conferring Sh2.1 million to Ms Odinga, the sister of Prime Minister Raila Odinga, for her personal use between March 2009 and January 2011.

The charges have since been dropped, but the case could be revived with new evidence.

Other members of the board are Nduva Muli (Kenya Railways Corporation chief executive officer), Dr
Mtana Lewa, Ken Wahome, Silas Gitari, Lazarus Keizi, Moses Njeka, Priscilla Mukuria and Daniel Obop.

The scheme is one of the biggest owners of land and real estate in Kenya.

The assets, according to the report, have been the object of illegal dealings by some members of the board and now risk making it impossible for the scheme to function.

For instance, a parcel of land on Nairobi’s Lower Hill Road popularly known as the “White House” was sold without following the scheme’s disposal of property manual.

The manual requires a property to be advertised in at least two local newspapers, after which the applicants are invited to make bids, are vetted and a letter of offer is made to the successful applicant.

Then a sale agreement is made upon which a transaction period is defined.

In the case of the “White House” where Crystal Valuers valued the property at Sh525 million, the disposal procedures were not adhered to.

Only two companies – African Star Development Limited and New Century Development Limited – expressed interest in the property.

On August 12, 2011, two days after the “White House” valuation, a special meeting of the trustees was held to discuss the sale.

A letter of offer was later sent to African Star quoting Sh625 million, only for African Star to give a counter offer of Sh525 million, the exact value of the property according to the scheme’s valuation.

A price of Sh540 million was agreed upon as the sale price. However, no details of negotiations were made available to the investigators.

“There were no minutes availed to validate this issue,” the report says.

Several other assets belonging to the pension scheme have been similarly disposed of in unclear circumstances.

Another irregularity cited involved members of the board who have since their appointment lived on or done business on the scheme’s property without paying the required rent, exposing the scheme to a loss of revenue.

Abuse of office charges have also emerged. The report queries the appointment of the chairperson to the board of trustees in 2008.

RBA officials could not locate the minutes detailing her appointment. She is the only sitting board member entitled to a Sh40,000 monthly allowance.

As the chair, Ms Odinga has an office at the scheme’s compound, a personal assistant, two secretaries, and a driver – all of whom are paid salaries ranging from Sh37,000 to Sh62,000 by the scheme.

The RBA investigation concludes that there has been flawed disposal of property, excesses in management from the chairperson’s office and that the trustees, despite their non-executive mandate, have taken over the running of the scheme in disregard of internal controls.

“The actions of the trustees are unsafe and detrimental to the interests of the scheme,” one of the report’s conclusions states.

The report also recommends that all trustees be removed from office and an interim administrator appointed.

Mr Johnson Miano, the chairman of the retirees, said they called for the dissolution of the board last year, but the government had not acted.

“We lost confidence in the board long time ago, and we are wondering why they are still in office even after we had resolved that they be relieved of their duties,” he said.

Board responds

But reacting to the RBA audit report, the scheme’s board of trustees says that the inspection report was done without giving it room to clear the allegations raised.

“It would have been helpful if the inspectors took a little more time to obtain documents that would have allayed their concerns.

"It should also be noted that the inspection was done at a time when the board had released several senior managers as result of malpractices discovered by the trustees.

"This contributed to the delay in providing some of the documents by the new management team,” reads part of the board’s response sent to newsrooms.

It also insists the scheme adhered to its disposal manual in the handling of property during disposal, intended disposal or leasing.

KRA retirees demand board sacking

PHOTO | FILE Kenya Railways Staff Retirement Benefit Scheme board chairperson Ms Beryl Odinga. 

By NATION CORRESPONDENT

Some of the more than 9,000 retired railway workers have demanded that recommendations of an audit report on the Kenya Railways Staff Retirement Benefit Scheme be implemented immediately.

The report, by the Retirement Benefits Authority (RBA), says the scheme is on the brink of collapse and recommends that the board of trustees be sacked and an interim administrator appointed.

“The audit report reveals glaring irregularities,” the pensioners said on Thursday.

The pensioners, who called at the Nation offices in Nakuru Town, led by Mr Charles Ogolla, Mr Gilbert Nyambengi and Mr Richard Ndende Mbanda, demanded immediate action by the government.

“We are in our twilight years and the little pension we are getting from the scheme is now under threat.

This is our only source of survival and we urge the government to speedily take action,” Mr Ogolla said.

The audit report says there was gross misconduct and conflict of interest by a majority of the nine-member board chaired by Ms Beryl Odinga.

Other board members are Kenya Railways chief executive Nduva Muli, Dr Mtana Lewa, Mr Ken Wahome, Mr Silas Gitari, Mr Lazarus Keizi, Mr Moses Njeka, Ms Priscilla Mukuria and Mr Daniel Obop.

The pensioners said though the board had sold some properties, it had failed to settle pension arrears dating back to 2005. (READ: Kenya Railway to sell assets to pay pensioners dues)

Last year, Ms Odinga toured the 47 counties assuring pensioners that the arrears would be paid.

“Our last hope lies with Prime Minister Raila Odinga and we have appealed to him to end our misery,” Mr Nyambengi said.

Among other recommendations, the report says a corporate trustee must take over from the interim administration for at least three years.

It also says the office used by the chairperson be rented out because it is not part of the terms of service.

Signatories to the accounts should be updated with immediate effect and a chief executive appointed, the report further recommends.

It also says the board must be surcharged for any irregular payment to any trustee.

The report also recommends that the contracts of the public relations and security firms be terminated immediately.

Trustees should undertake to pay all pension arrears, the report also recommends.

Ex-teachers to be paid Sh16bn

 

The Teachers Service Commission headquarters in Nairobi. Photo/FILE 

By WANJIRU MACHARIA lwmacharia@ke.nationmedia.com

In Summary

• Teachers Service Commission finally agrees to settle the court award within two weeks

Retired teachers will finally get their Sh16 billion pension arrears after the teachers commission told the High Court that it was willing to pay within the next two weeks.

Senior principal state counsel Mwangi Njoroge told the High Court in Nakuru that the Teachers Service Commission would settle the court award before two weeks lapse.

The retired teachers had moved to court last week seeking permission to commence a judicial review to compel the TSC to pay them Sh16.7 billion as part of their pension arrears. (READ: Ex-teachers in strike threat over Sh17bn)

In their application, the former teachers asked the court to grant them leave to file a judicial review to command the commission to pay part of the unpaid pension up to 2003 plus costs taxed, which stand at Sh382.6 million.

They also wanted the court to order TSC to pay another Sh3.34 billion as legal fees to their lawyer Dominic Mukui Kimatta.

In their affidavit, the retired teachers through their lawyer stated that the High Court had ordered TSC and the Director of Pensions in the Ministry of Finance to pay them pensions backdated to 1997.

The respondent was also ordered to liaise with the Director of Pensions to review the former teachers’ current pension to reflect the new rates.

Lawyer Kimatta stated that the TSC had refused to implement the court orders compelling the retired teachers to seek further directives. “The respondent has declined to settle Sh28.5 billion despite a judgment by the High Court,” said Mr Kimatta in his affidavit.

He added that at one time, the Director of Pensions calculated unpaid retired teachers’ pension up to 2003, which stood at Sh16.7 billion.

“The respondent has refused to meet with me to ascertain outstanding amounts despite requests and has continued to act as if I do not exist,” he added.

The former teachers sued TSC in 2006 claiming unpaid lump sum salary increment and accrued pension from July 1997.

The teachers won the case before Nakuru High Court judge David Maraga. The judge ruled that all retired teachers covered by the agreement between the TSC and Knut were entitled to their retirement benefits.

The matter will be mentioned on March 14 for the confirmation of payment.

Retirement is coming, how secure are you financially?

Many Kenyans are struggling through their sunset years without an adequate income because they did not prepare well. Photo/FILE 

Ms Mary Wamathai had a “bitter retirement.”

The saga begun when she was first employed as a teacher in 1978.

A miscommunication saw the government add two years to her age. So when she was ordered to retire in 2007, it came as a surprise.

“I wasn’t ready. I had loans to pay and all my investments had been lost when my husband and I separated,” she told Money from her Limuru home.

Barely five years after that untimely retirement, she has gone through her pension lump sum payment of Sh800,000 and is hard pressed to support her family on a meager Sh8,000 monthly stipend.

Ms Wamathai is not an isolated case. Millions of Kenyans struggle through retirement without a steady, adequate pension income.

Outliving one’s productivity has not been of major concern to Kenyans in the past, given the low life expectancy and the social protection provided by cultural norms.

However, the over 55 life expectancy has been rising over the last decade. A breakdown of traditional extended family units has further made it harder for retirees to live comfortably.

Despite these, only about 20 per cent of Kenyans have pension plans, with most of them being in formal employment. 80 per cent of the country’s population is not secured for life after employment.

Industry analysts point out that even the existing pension plans leave a lot to be desired.

To sustain a comfortable lifestyle, retirees need to maintain a monthly income that is at least 33 per cent of their monthly income during employment.

“Pensioners are lucky if their retirement income is 25 per cent of what they made during employment,” said Mr Lazurus Muema, former chairperson of the Retirement Benefit Schemes Association and current HelpAge Kenya treasurer.

The manner in which pension money is doled out plays a critical role in determining its sustainability. The industry classifies pension plans into provident schemes and pension schemes.

Provident scheme holders usually receive a lump sum while pension scheme members receive a monthly stipend or a combination of a lump sum and a monthly stipend.

According to financial experts, money acquired through the provident scheme is easier to squander.

“The risk of facing an impoverished old age remains very real should the retiree mismanage the single lump sum payment,” said commercial lawyer, Geoffrey Odongo.

Although Ms Wamathai’s pension scheme gave her the option of a monthly annuity, the Sh800,000 lump sum disappeared

Employees are also increasingly withdrawing their pension funds early in a disturbing trend that is exacerbating the situation.

Data collected by the Retirement Benefits Authority (RBA) indicates that in the six months ending June 2011, withdrawals from individual benefit schemes totalled Sh1.3 billion; double the amount withdrawn the previous year.

The massive withdrawals were occasioned by tough economic times and a relaxation of government preservation rules that made it possible for scheme members to access 50 per cent of their employer’s contributions.

If the money withdrawn is mismanaged, thousands of people could find themselves in dire straits come retirement.

“They withdraw this money early, rationalising that they can invest it better. However, when given large sums of money, most people do not make the right investment decisions,” said Mr Muema.

Even among those who wait until retirement, pension payments can sometimes go into paying heavy loan and mortgage debts.

“I have a loan of Sh70,000. I have to figure out how to pay it because I don’t want to carry it into retirement,” says Ms Margaret Koome, a civil servant contemplating on retirement.

Faced with this grim retirement outlook, what can the average Kenyan do to better his or her situation? According to industry players, a lot.

For one, retirement planning ought to start the moment one begins to receive an income. Employer-sponsored pension plans will often kick in automatically. Because of this, most employees tend to neglect retirement planning.

“Any person above 18 should start thinking about their retirement plans early in life, regardless of whether they are employed with a stable source of income or not,” reads a statement by Zimele Asset Managers.

Upon drawing this plan, many employees often find that the money they stand to receive in an occupational retirement benefit scheme is not adequate to fit their ideal lifestyles.

Individuals may boost their retirement savings by making additional voluntary contributions into personal pension plans, in addition to their employer’s retirement benefits scheme.

According to Zimele, contributing to pension schemes above and beyond what employers provide could save the scheme member a tidy sum, thanks to Kenya Revenue Authority tax benefits.

For those in the informal sector, the Retirement Benefits Authority (RBA) has introduced a number of investment vehicles.

One of these is the Blue SME Jua Kali (Mbao) Scheme, which requires members to contribute about Sh20 daily to participate.

Apart from participating in schemes, developing a personal savings and investment culture could go a long way in securing the sunset years.

Mr Muema advises individuals to look into investment vehicles that will provide passive income throughout retirement. These include rental property, stocks, bonds, and mutual funds.

“At some point during your retirement, you will no longer be able to move around and micromanage businesses. You should seek opportunities that will give you good returns with the least amount of interference,” he said.

In the case of stocks, people investing with retirement in mind should look for companies that have had a solid market performance over the last decade. They should also avoid investor panic during market fluctuations.

quickly in the face of household expenses and family needs.

“At the time, I was living with some of my children and grandchildren. I was paying rent and I was buying food,” she says.

Ex-policeman seeks Sh20m over dismissal

 
A police officer who was retired from the force due to physical disability is seeking Sh20 million compensation from the government.

Mr Duncan Waga claims that his services as a police officer were wrongfully terminated because he was visually impaired, a condition he says he suffered while in the line of duty.

Through lawyer John Chigiti, he told the court that the action was discriminatory, inhuman, degrading and contrary to constitutional provisions on human rights.

“There are people in the police force who are living with HIV and Aids and are still serving the force. It is discriminatory to single out people with disability for dismissal,” Mr Chigiti said.

Not accurately computed

He submitted that it was unfair for the police force to retire Mr Waga early without the compensation he deserved.

He said that the Sh640,000 package given to him as pension was not accurately computed because he still had 14 years to retirement.

However, the application was opposed by the Attorney-General who submitted that none of Mr Waga’s rights were violated since his retirement at an early age was provided for in the Police Standing Orders.

Through state counsel Edward Kakoi, the AG said the Police Standing Orders provide that a person who qualifies to serve in the force must be medically fit and have good vision and hearing.

Mr Justice David Majanja ruled he would give his directions on the case on March 19.

Secure your income now for the benefit of your retirement years

 

By SUNDEEP K RAICHURA AND ANTHONY KILAVI

In Summary

• Before you stop working, you need to give serious thought to making your money work for you during your retirement years

Around the globe — and it is no different in Kenya — people consistently underestimate how much money they will need for their retirement years.

The importance of saving and investing throughout your working life — ideally for at least 30 years — simply cannot be emphasised enough.

Remember, you want your retirement nest egg to be big enough to keep you comfortable. Preferably, you want your pension to be as close to your final salary as possible. You also need it to last for the whole of your retirement.

Research has shown that the average Kenyan retiree is expected to have generated savings that will purchase a pension of only 22 per cent of the salary they were earning before they retired. This is a poor statistic, and the question is: “What are Kenyan retirees doing wrong?”

The mistakes to avoid in your retirement planning include starting to save too late, spending your retirement benefits when you change jobs, investing incorrectly during your working life, timing the stock markets, and not taking expert advice.

Many young people are more concerned about spending money on a fancy car and making ends meet than saving for their retirement.

This is understandable, but neglecting to save for retirement at an early age is a huge mistake. Contributions made earlier in life will have a longer time to multiply.

Instead of choosing a cash payout when you leave your retirement fund, try to be disciplined and preserve your retirement benefit.

This means that when you change jobs, you should keep it preserved (either in your current scheme, a new employer’s fund, or a personal pension plan) so that the lump sum saved and invested is not only untouched, but can continue to grow through appropriate exposure to investment markets.

A common mistake many people make is to invest too conservatively for retirement. It is true that over the short term, cash can be a safe investment. But you must remember that over the long term, cash returns cannot beat those of a balanced portfolio comprising shares and bonds.

Further, cash returns (over the long term) do not beat inflation by very much. Unfortunately, many people think that they can predict what will happen with the stock market and change investments in line with their predictions. Research shows that this seldom works.

Some retirement fund members adopt a do-it-yourself approach. However, an appropriately trained financial adviser can add enormous value, saving you from making costly mistakes.

Start consulting a financial adviser during your working life and continue to get professional help even after retirement.

The more you educate yourself about your pension fund and general financial matters, the more likely you are to achieve a retirement that is comfortable, secure, and free of money worries.

Sundeep K Raichura and Anthony Kilavi. Alexander Forbes Financial Services (East Africa) Limited

NSSF pays millions for Kanu era deals

Lugari MP Cyrus Jirongo 

By  PATRICK MAYOYO pmayoyo@ke.nationmedia.com and JAINDI KISERO jkisero@ke.nationmedia.com

In Summary

• Pension savings used to pay for projects which either did not get off the ground or were not completed

The National Social Security Fund has controversially paid Lugari MP Cyrus Jirongo and a construction firm owned by a Ugandan businessman more than Sh830 million as settlement for incomplete housing projects from the Moi era.

According to documents seen by the Daily Nation, NSSF entered into a consent with Mugoya Construction and Engineering and S.K.Jirongo and Sololo Outlets as settlement in two separate cases they had filed against the pension fund.

Part of the released Sh800 million was to pay for incomplete projects cancelled years ago. The large payments were released after negotiations by way of out of court settlements.

In one case, the fund paid Sh342 million to Ugandan businessman James Isabirye of Mugoya construction Company for a project in which the contractor was supposed to build 265 housing units on a plot owned by the fund in Karen.

The houses were never built. But the contractor put in claims on the grounds that he had done some basic work before the project was cancelled.

NSSF defence in court has been that no payments were due because the contractor  proceeded to the site before he was asked to take possession of it.

Mugoya carried out excavations of the road boundary and cleared the site. As at the time of cancellation of the project in 1995, the NSSF had paid Mugoya Sh91 million.

It is for these minimal works that the workers body has shelled out the hundreds of millions.

Documents show that the original claim by Mugoya was for Sh663 million.

In September last year, the board authorized the management of the company to negotiate with Mugoya and reach a final settlement.

Subsequently, negotiations were held and the parties agreed to settle at Sh 342 million.

In the Sh 342 million consent NSSF entered with Mugoya Construction and Engineering, the Fund lawyer P.M.Bunde, said was in relation to a tender awarded to the firm for planned development of the Karen property at a cost of Sh 1,910,856,740.

The construction firm was to build 256 housing units, an administration block, club house, kindergarten and auxiliary buildings.

However, the project never took off because work started even before approvals had been granted by the Nairobi City Council. Karen/Langa’ata residents also opposed it.

“Subsequently, due to the above stated setbacks the project was cancelled on 2nd December, 1999. Consequently, in 2005 Mugoya Limited sued the Fund claiming Sh 663,323,620.30 plus damages, interest and costs,” the legal officer notes.

In the case concerning, Mr Jirongo, a letter written by NSSF Legal officer, P.M.Bunde, dated January 6, this year confirms that S.K.Jirongo and Sololo Outlets had agreed to be paid more than Sh 490 million, to settle the case.

“We are in receipt of a consent dated 22nd December, 2011, fully and finally settling the above stated matter at Sh 490, 850,090. The consent further provides that the cost of the suit be awarded to the Plaintiffs,” the letter says in part.

The NSSF legal officer says that the Fund entered into an agreement with the two parties in September 1992 for the development of a housing project at a cost of Sh 1.2 billion which was to be financed through PostBank Credit.

NSSF plans to build low cost houses

NSSF  managing trustee, Mr Tom Odongo 

By Nation Correspondent

About 30,000 low cost houses are planned for construction in Mavoko municipality by the National Social Security Fund (NSSF), as it deepens its investment in the real estate sector.

The pension fund said the project will sit on its 1000-acre piece of land in Mavoko, Machakos County.

“We want to develop a higher quality, low-cost modern estate complete with power lines, sewerage system, security, roads and recreational facilities. This will help alleviate the acute shortage of housing in Nairobi and its environs,” the fund’s managing trustee, Mr Tom Odongo, said on Wednesday said as he presided over a function to reward employers leading in monthly contributions to the fund.

Already, the tender process has been opened to international bidders. He said the full details of the cost and timeline for the multi-billion housing project will be divulged with the completion of the tender process next month, during a ground breaking event at the site.

“We did an international tender last year, but our options are still open as we are yet to finalise the process. I cannot tell you how much it will cost at the moment,” Mr Odongo said, while adding that the choice of an international tender was based on the magnitude of the project.

Retired teachers allowed to sue TSC over dues

 

By WANJIRU MACHARIA Lwmacharia@ke.nationmedia.com

Retired teachers can commence judicial review proceedings to compel their former employer to pay them more than Sh16 billion pension arrears.

This is after the High Court in Nakuru on Wednesday allowed them to file the suit after several attempts to make the Teachers Service Commission (TSC) pay the cash failed.

In the application filed on Thurday, the more than 51,000 teachers asked Mr Justice Anyara Emukule to allow them to move to a higher court after the TSC refused to give them their dues even after being ordered by both the High Court and the Court of Appeal.

They want to start a judicial review to compel the TSC to pay them Sh16.7 billion as part of their pension arrears up to 2003 plus costs taxed, which stand at Sh382.6 million.

They also want the court to order the TSC to pay another Sh3.34 billion as legal fees to their lawyer, Mr Dominic Mukui Kimatta.

In their affidavit, the retired teachers through their lawyer stated that the High Court had ordered the TSC and the Director of Pensions in the Ministry of Finance to pay them pensions backdated to 1997.

The respondent was also ordered to liaise with the Director of Pensions to review the former teachers’ current pension to reflect the new rates.

Mr Kimatta stated that the respondent had refused to implement the court orders, compelling his clients to seek further directives.

“The respondent has declined to settle Sh28.5 billion despite a judgment by the High Court,” he said in his affidavit.

He added that at one time, the Director of Pensions calculated unpaid retired teachers’ pension up to to 2003, which stood at Sh16.7 billion.

Rescue for pyrethrum workers’ pension plan

 

Suleiman Mbatiah | Nation Pyrethrum Board of Kenya workers protest what they termed unprocedural compulsory leave in Nakuru on February 23, 2012.  

By FRANCIS MUREITHI  fmureithi@ke.nationmedia.com

In Summary

• Regulator wants Pyrethrum Board of Kenya to involve retirees in the process of disposing of its assets

The Retirement Benefit Authority has stepped in to try to save the pension scheme for workers at the troubled Pyrethrum Board of Kenya.

The authority has asked the board to involve the retirees in the process of disposing of some its prime assets, including houses in the upmarket Milimani estate in Nakuru.

PBK plans to sell some of the houses and use the Sh300 million expected from the sale to settle its mounting debts.

RBA Chief Executive Officer Edward Odundo on March 8 met PBK managing director Isaac Mulagoli and Ms Elizabeth Kabiru, the chairperson of the Board of Trustees of Pyrethrum Board of Kenya Superannuation Pension Scheme, to chart course of action.

The meeting was also attended by representatives of the pensioners led by their chairmen Mr Robinson Kuria and Mr Harun Tinga.

During the meeting RBA reportedly told the trustees that the board should be held responsible for failing to comply with RBA rules and regulations.

A top RBA manager reportedly told the them that “paying a pensioner his or her dues is  a human right and since you have failed to do so you ought to be in jail”.

Incidentally the pensioners are blaming the RBA for failing to crack the whip when their scheme was collapsing.

“If RBA had not slept on the job, the woes that PBK pensioners are undergoing today would be a thing of the past,” said Mr Tinga, who speaks for the group of retirees who left PBK in the 2009 retrenchment.

RBA, said Mr Tinga, failed to take action after the scheme failed to comply with RBA’s registration rules.

The scheme has been operational since 1991, but it was only officially registered in 2011.

RBA rules stipulate that when a sponsor fails to register a pension scheme it is liable to a fine of Sh500,000 or imprisonment of two years.

“If we were to apportion blame, RBA will take the lion’s share as it has been sleeping on the job,” said Mr Tinga.

But RBA has defended itself saying the scheme trustees have been giving remedial plans which they have never fulfilled.

“We have played our role, including writing to the permanent secretary of Agriculture Romanos Kiome last month to look for alternative ways to fund the scheme, but we have not received a reply,” said a senior RBA official, who did not want to be quoted as he is not authorised to speak to the press on behalf the RBA.

When it began showing signs of financial mismanagement, RBA appointed Kingsland Court and Pension Services, an interim administrator, to ensure the scheme complies with RBA rules and regulations.

The new administrator was supposed to be in office for one year but  has been around for 12 years with little improvement in the scheme’s financial position.

When pyrethrum farming flourished in the 1970s and 1980s, the Pyrethrum Board of Kenya (PBK) workers’ pension scheme was one of the richest in the country with pensioners enjoying regular payouts.

In addition, the workers would get a hefty yearly bonus as PBK’s balance sheet contained billions of shillings worth of assets.

But today the scheme is in intensive care following years of mismanagement, corruption and theft of its property.

The  more than 200 pensioners were last paid their monthly cheque in  November last year and are now owed Sh9.2million in arrears.

Mbao pension contributors set eyes on mortgages

Photo/FILE Members of the scheme contribute at least Sh20 daily towards the mortgages, as part of their retirement plan. 

By NATION CORRESPONDENT

Contributors to the Mbao Pension plan, an informal sector retirement pension scheme, will soon use their savings as collateral to access mortgage services.

Members of the scheme contribute at least Sh20 daily, as part of their retirement plan.

Speaking on Wednesday at a status of business reporting in Kenya event at in Nairobi, the Kenya National Federation of Jua Kali Association chairman, Mr Richard Muteti, said the sector has long been locked out of the financial arena in the country.

This has made it hard for workers in the sector to access financing, due to the perception by financial institutions that their engagements are risky.

“The scheme was our reaction to the exclusion of the informal sector in the financial services.

“But, as the savings continue to grow, the programme will also be used to access financing for houses and property by the members,” Mr Muteti said.

Most retirement benefit schemes have targeted the formal sector, leaving out the bulk of Kenyans, who contribute 24.5 per cent to the country’s gross domestic product.

The sector still lacks representation at the National Social Security Fund board according to Mr Muteti.

After launch of the scheme last year, the Retirement Benefits Authority indicated that it was targeting about one million informal sector workers on the scheme, and mobilise about Sh7.6 billion in one year.

The plan has mobilised about Sh1 billion so far.

NSSF denies reducing stake in cement maker

Photo/FILE NSSF headquarters in Nairobi.  

By DAVE OPIYO dopiyo@ke.nationmedia.com

In Summary

• Allegations that the State reduced its shares in EAPCC by 3pc is mischief, says acting boss

The controversy over the ownership of East African Portland Cement Company took a new turn on Wednesday after the national pension provider denied reducing its stake in the cement maker.

The National Social Security Fund (NSSF) had not sold three per cent of its shares in the firm as earlier alleged, acting managing director Tom Odongo told a parliamentary committee.

He described as “mischief” the announcement at the cement maker’s annual general meeting last year that the government had reduced its stake from 27 to 24 per cent. (READ: Cement firm reports Sh88 million loss)

The parliamentary committee on Labour and Social Welfare, which is chaired by Belgut MP Charles Keter, was told that had the transfer happened as alleged, it would have cut the government shareholding in the cement company to 49 per cent since the Treasury had a 25 per cent direct stake.

The High Court is on March 16 expected to make a ruling on whether the cement maker is still a parastatal.

Mr Odongo explained that the confusion may have arisen from the fact that the giant workers’ pension scheme intended to sell three per cent of its stake in the cement factory.

He said the then managing trustee Alex Kazongo, who represented the fund in the cement maker’s board, shared this information with his fellow directors.

Mr Kazongo is on terminal leave pending the expiry of his contract later this month.

“This is why we say there was mischief here. There is nothing wrong with Mr Kazongo telling fellow directors of the intention to sell the shares,” Mr Odongo said.

Mr Kazongo is expected to be summoned by the committee to shed more light on the issue.

“Transfer of shares can never be done under the table. Due process must be followed. As at the time of the AGM, the transfer documents were under my custody,” the acting director said.

He said he had written to among others, the Capital Market Authority, the Auditor General, the Ministry of Industrialisation and others, refuting allegations that the transfer had taken place.

Saccos urged to encourage retirement savings

 
NATION CORRESPONDENT

Sacco societies should go beyond lending and deposit-taking to help their members start saving for retirement, the Retirement Benefits Authority has urged.

With traditional systems of old-age security breaking down, accomplishing a secure, comfortable retirement will be easier if one plans for their retirement, authority CEO Edward Odundo said.

“Saccos and pensions are key to our country’s development because they mobilise savings to enable us realise a savings to gross domestic product ratio of 25-28 per cent, as envisaged in the macro-economic framework underpinning the Vision 2030,” he said during Muramati Sacco Society annual general meeting at Murang’a on Friday.

“But equally important, they have a responsibility to ensure that their members have access to retirement planning to adequately prepare them for old-age by saving for their retirement.”

Mr Odundo said that the authority works with the Finance ministry to ensure tax incentives and regulations are put in place and that Kenyans take charge of their retirement planning. Both employed and self-employed people should also be allowed to have suitable retirement saving arrangement.

Muramati Sacco Society chief executive Tony Mwangi said the sacco had an interest in the Mbao Pension Plan because of its flexibility as it enables members to save for retirement by contributing at least Sh20 daily through either M-Pesa or Airtel Money. He said the sacco will have a desk dedicated to the plan in each of its 13 branches

Hope for KR pensioners as new board is unveiled

By FRANCIS MUREITHI fmureithi@ke.nationmedia.com

A new board to run the Kenya Railways Staff Retirement Benefit Scheme has been unveiled, one month after retirees demanded the sacking of directors linked to mismanagement.

The appointment of five members to the board comes in the wake of an audit report by the Retirement Benefit Authority (RBA) which revealed how the outgoing board of trustees had mismanaged billions of shillings belonging to more than 9,000 retired Kenya Railways workers.

The scheme which is one of the wealthiest in the country in terms of land assets is worth in excess of Sh20 billion.

General (rtd) Jeremiah Kianga, who is the chairman of the Board of Directors of the Kenya Railways Corporation, unveiled the new team early last month in Nairobi during a meeting held at the KRC boardroom in Nairobi.

The new board members are Mr Arthur Runyejes, Mr Johnson Mwinzi, Ms Rhoda Muriungi, Captain (rtd) Ahmed Munir Abile and Mrs Josephine Masibo who is a senior manager at Human Resource Department in the corporation.

An insider in the meeting told the Sunday Nation that one nominee declined to take over the new duties.

Pensioners will elect their nominee at the Kenya Railways Training Institute in Nairobi on April 27 to join the board.

Two other board members will come from Rift Valley Railways and the board of Kenya Railways Corporation.

The function to unveil the new board was attended by representatives from Kenya Railways Pensioners Association, the Association of Kenya Railways Retirement Association, former senior officials of Kenya Railways and women representatives .

During the meeting, General (rtd) Kianga reportedly told the pensioners that the new team was committed to ensure they will never suffer again.

“He assured us that the new team will bring in professionalism and that if we feel there is anything wrong going on at the scheme, his doors were wide opened,” said Mr Robert Azaria, the secretary general of Kenya Railways Pensioners Association who attended the meeting.

The previous nine-member board which was sent packing was chaired by Ms Beryl Odinga. Other board members were Kenya Railways Chief Executive Nduva Muli, Dr Mtana Lewa, Mr Ken Wahome, Mr Silas Gitari, Mr Lazarus Keizi, Mr Moses Njeka, Ms Priscilla Mukuria and Mr Daniel Obop.

The previous board was accused of massive irregularities including selling some properties. It had also failed to settle pension arrears dating back to 2005.

NSSF pays another Sh590m for old deal

 

Photo/FILE NSSF headquarters in Nairobi. According to Labour assistant minister Sospeter Ojaamong, inquiries at the Registrar of Companies revealed no records available for two firms that benefited from the payout by NSSF. 

By PATRICK MAYOYO pmayoyo@ke.nationmedia.com

The national pension fund has paid a construction firm Sh590 million in an out-of-court settlement.

This is the second such payment the National Social Security Fund (NSSF) has made, bringing to Sh1.4 billion the money paid since last year following arbitration.

According to documents seen by the Daily Nation, Pan African Builders and Contractors were paid the Sh590 million following arbitration arising from a dispute regarding work at the fund’s Kitisuru housing estate.

The court had awarded the company Sh662 million.

The Sh590 million was paid to four entities — Pan African Builders and Contractors Ltd, Sh305 million, Liteline Enterprises Ltd Sh20 million, Speed Wings Ltd Sh121 million and Sh143 million to Kipkorir, Titoo and Ikiara Advocates.

When contacted lawyer Donald Kipkorir said the dispute between the NSSF and Pan African Builders and Contractors Ltd (Pabco) begun in 2003 in the High Court.

It then went to arbitration before it went back to the High Court on appeal. (READ: Prominent lawyers paid millions for NSSF services)

“After arbitral proceedings in favour of Pabco, a decree was issued in favour of Pabco for Sh662 million plus costs and interest. In spite of this, Pabco agreed to accept the reduced sum of Sh590 million,” he said.

Mr Kipkorir said whoever was pushing for the case to be published in the media was ignorant of the material facts and the court and arbitral proceedings. He said Pabco constructed and handed over the project as per contract.

“Any contrary allegation is actuated by malice, falsehoods and is defamatory,” he said.

However, it has emerged that records of Liteline Enterprises Ltd and Speed Wings Ltd cannot be traced at the Registrar of Companies.

A letter from the registrar dated March 12 addressed to the Labour ministry says the two firms are not in their database.

“We refer to your letter dated March 12, 2012. The above companies/business names do not appear in our database of registered companies/businesses,” the letter says.

On March 13, Belgut MP Charles Keter raised the matter in Parliament when he asked the Minister for Labour, Mr John Munyes, to explain how the money paid to Pan African Builders and Contractors was distributed.

Labour assistant minister Sospeter Ojaamong said inquiries at the Registrar of Companies had revealed no records were available for two firms that benefited from the payout.

Mr Ojaamong told Parliament he would refer the case to the Ethics and Anti-Corruption Commission for investigations, possibly leading to the prosecution of the concerned parties.

On Thursday, an NSSF official said Pan African Builders and Contractors was paid Sh500 million for breach of contract.

“The firm was building our houses in Kitisuru but their contract was stopped and they took us to court demanding Sh600 million plus inte
 

 

''We asked for an out-of-court settlement and paid Sh500 million,” the NSSF official who did not want to be named because he is not authorised to speak to the media said.

Documents indicate that Pan African Builders and Contractors was in June 1997 awarded a tender to build 300 houses at the NSSF Kitisuru housing estate for Sh1.9 billion.

In December 2005, the company went to court seeking payment of Sh528 million as outstanding contractual claims, but following consent by both parties, the matter was referred to arbitration.

The award by Milimani Commercial Court was the result of that arbitration.

However, after further negotiations with the board of trustees, the parties agreed to a final amount of Sh590 million.

This is the second such payment to come to light. (READ: NSSF pays millions for Kanu era deals)

In the earlier one, Lugari MP Cyrus Jirongo and a construction firm owned by a Ugandan businessman were recently paid more than Sh830 million as settlement for incomplete housing projects from the Kanu administration.

According to documents seen by Nation, NSSF entered into an agreement with Mugoya Construction and Engineering and S.K. Jirongo and Sololo Outlets as settlement in two cases against the pension fund.

In one case, the fund paid Sh342 million to Uganda businessmen James Isabirye of Mugoya construction Company for a project in which the contractor was supposed to build 265 housing units on a plot owned by the fund in Karen.

In September last year, the board authorised the management of the company to negotiate with Mugoya and reach a final settlement.

Subsequently, negotiations were held and the parties agreed to settle at Sh342 million.

The Sh490 million paid to Mr Jirongo was in respect to the development of Hazina Housing Estate.

MPs Kabando wa Kabando (Mukurweini) and Nderito Murithi (Laikipia West) have demanded that NSSF explains why they withdrew the cases.

“Whilst out-of-court settlements are legal, it’s very possible that both parties colluded to withdraw the case for fear that the courts may refuse to enforce an illegality,” the MPs said.

rest.

Agency probes NSSF over Sh2.8bn scandal

 

NSSF headquarters in Nairobi. Photo/FILE 

By BENJAMIN MUINDI bmuindi@ke.nationmedia.com

In Summary

• Unit wants to find out basis on which the pension fund paid claims to firms

A government agency has launched investigations into questionable payment of Sh1.4 billion to three companies by the national pension fund and loss of Sh1.4 billion through a stock brokerage firm.

The Efficiency Monitoring Unit, which falls under the Office of the Prime Minister, said the investigations were meant to determine the basis on which the National Social Security Fund (NSSF) paid claims to three firms.

The entities paid are Mugoya Construction and Engineering Company, S.K. Jirongo/Sololo Outlets and Pan African Builders and Contractors (PABCO).

A letter from the permanent secretary in the Prime Minister’s Office, Dr Mohamed Isahakia, addressed to his Labour counterpart Beatrice Kituyi, shows that the three companies were paid Sh320 million, Sh490 million and Sh590 million, respectively.

However, NSSF acting managing trustee Tom Odongo defended the out-of-court payment of Sh590 million to PABCO, saying it had helped reduce the liabilities.

Dr Isahakia’s letter says: “In view of the foregoing, the unit has been directed to investigate and report on the authenticity, legal and commercial basis for the payments made by the NSSF to the various law firms involved in the settlement of the claims by the three companies.”

The investigations will also determine the circumstances that led to loss of Sh1.4 billion placed with the stock brokerage firm Discount Securities Exchange.

Also to be investigated are the qualifications of current trustees of the fund, and the effectiveness of the board process for evaluation of the outgoing managing trustee.

Mr Odongo denied any malpractice in the payment made to PABCO, which NSSF contracted during the Moi regime to build houses, apartments and a shopping centre in Kitisuru.

In a statement, Mr Odongo said his board, “in negotiating the matter out of court, has substantially reduced the contingent liabilities which are a burden to the members in the long-term and also obtained cost savings”. He said after completion of the work, PABCO “rendered their final accounts to the fund’s consultants” but were never settled.

PABCO then sued the fund for Sh1.3 billion, Mr Odongo added.

State officers may begin to contribute to pension fund

 

By GRIFFINS OMWENGA gomwenga@ke.nationmedia.com
Posted  Saturday, April 21  2012 at  16:33

Public servants may start contributing towards their retirement by January next year if a Bill ratified by Parliament on Wednesday receives presidential assent.

The 2012/13 Budget Policy Statement from Treasury indicates pension expenses are set to increase to Sh40 billion in the next financial year, a cost that will be borne by taxpayers.

This represents a 15 per cent increase from Sh34.8 billion last year.

Pension costs have risen by 72 per cent in the five years since the government officially raised the retirement age to 60 for public servants.

And Treasury projects these costs will surge to Sh48 million by 2015.

The World Bank-recommended ratio of pensions cost to a country’s total gross domestic product is 2.5 per cent, but Kenya is fast moving past this mark.

To curb the rise in cost, the Public Service Pensions Superannuation Scheme Bill 2012 seeks to bring about pensions reforms.

It proposes the creation of a Public Servants Superannuation Scheme that would help employees save for their retirement, weaning them off retirement stipends funded by the taxpayer.

Treasury wants to have parastatal pension funds converted into contributory schemes where public servants contribute 7.5 per cent of their basic salary while the government tops this up with a 12.5 per cent contribution.

The idea was conceived in 2005 by Treasury Permanent Secretary Joseph Kinyua, but only 20,000, or four per cent, of 500,000 employees have registered to be considered in the scheme.

Mr Michael Obonyo of the Pensions Department of the Finance ministry told the Sunday Nation the government risks reaching the point where it is unable to underwrite pension expenses unless public servants contribute towards their retirement.

Parastatal and municipal pensions world over have been at the centre of the debt crises in Europe and the United States, a situation Kenya is keen to avoid as the devolved government system begins to take shape.

Consuming tax money

Statistics indicate that pensions expenditure in Kenya is exceeded only by Education, Defence, Roads, and Health ministries in consuming tax money.

Mr Davies Kairu, a pensions expert, has urged the government to emulate the private sector where most employers and employees contribute to the pension scheme to ease the burden on the employer.

But he added that the private sector has areas it needs to improve on as of the 93,000 private schemes registered with the National Social Security Fund, only 3,000 are registered with the Retirement Benefits Authority.

The funding gap–the difference between assets and liabilities held by the NSSF–currently stands at 21 per cent of the funds, with the burden of plugging the deficit falling on taxpayers.

Data from the RBA shows that only 79 per cent of pension liabilities of parastatals are backed by tangible assets. If the President assents, the Directorate of Pensions in Treasury expects the Public Servants Superannuation Scheme to be effected next year.

RBA to act on employers who withold cash for pension funds

Dr Isaac Mulagoli the chief executive Pyrethrum Board of Kenya. Photo/FILE 

By FRANCIS MUREITHI  fmureithi@ke.nationmedia.com

The pensions regulator has called for an urgent meeting to save the Pyrethrum Board of Kenya Staff Superannuation Scheme from total collapse.

The Retirement Benefit Authority (RBA) has also promised to act against employers who fail to remit money deducted from employees to retirement schemes.

“The board of RBA has called for an urgent meeting to identify a liquidator who will take over the assets of the PBK as it has failed to show commitment to remit money to the pension scheme,” a senior RBA official told the Sunday Nation.

The official, who declined to be named as he is not authorised to speak to the press on behalf of RBA, accused PBK of not being “serious” in securing money for the retirees.

PBK pensioners Mr Thomas Nyambega and Mr Harun Tinga, who attended a meeting with RBA officials. welcomed the new move but termed it “too little too late”.

“This is what RBA should have done long time ago instead of waiting for pensioners to suffer as they watch, yet they are the custodian of the rules and regulations which govern the management of pension schemes in the country,” said Mr Tinga.

During the meeting, it emerged that PBK had submitted a remedial plan, but it was rejected by RBA.

Plan rejected

“The remedial plan submitted by PBK does not add value to the pensioners as per our agreement, and we have therefore rejected it in totality,” said RBA officials.

The official said that PBK, in a memorandum written by the board’s managing director Isaac Mulagoli, had requested RBA to give it up to 2016 to sort out its financial mess.

However, a source told the Sunday Nation that RBA has written to the board indicating its intention to appoint a liquidator to take over some of the assets belonging to PBK and dispose them of to enable the pensioners to be paid their monthly dues without any interruption.

The pensioners had threatened to stage a demonstration outside the RBA offices in Nairobi after the authority appeared to be ignoring the issue.

They cited a case where RBA, in its tribunal ruling of September 26, 2011, ordered PBK to pay the pensioners their delayed pension, but this has not been done.

“RBA has even refused to give us a copy of the ruling so that we could seek intervention from the High Court; this is tantamount to deliberately delaying the wheels of justice,” said Mr Tinga.

But an official of the RBA said the days of employers who have been delaying in remitting pension deductions are numbered.

Drive to have all employers enrol with pension schemes

 

DIANA NGILA | NATION Alexander Forbes Retirement Fund board of trustees chairman Richard Kemoli (left) with the chief executive officer in East Africa, Mr James Olubayi, at a press briefing at Intercontinental Hotel, Nairobi, before the firm’s annual general meeting. 

By MWANIKI WAHOME jwahome@ke.nationmedia.com

In Summary

• Increase the incentives to firms and individuals as country faces challenge of an ageing population, says financial services company

Financial services provider Alexander Forbes wants the government to make it mandatory for employers to register their workers in pension schemes.

Speaking during the company’s annual general meeting, managing director Sundeep Raichura also said the government should consider increasing incentives for pension schemes and individuals to build the numbers.

“We have suggested a basic universal pension to alleviate old-age poverty. We are asking the government to make it mandatory for employers with more than five workers to register with pension schemes,” he said.

He said Kenya was faced with the challenge of an ageing population, and it was important for the government to encourage more people to join pension schemes, particularly in the informal sector.

Out of an estimated 60,000 employers in the country, he said, only 1,400 had registered their workers with pension schemes.

He said pension coverage remained low in the country, with only two million out of 12 million in formal and informal employment registered, out of the national total population of 40 million.

Mr Raichura said the current incentives to pension schemes were not enough to increase the numbers, adding that the Sh20,000 deductible amount should be increased significantly as it had not been reviewed over a period of five years.

He said that in countries like Ireland, the government matched contributions by individuals to boost the number of those registered.

And in Uganda and Tanzania it is mandatory for employers to register their workers with pension schemes.

He added that with East Africa’s harmonisation of systems, Kenya should follow suit and make contribution to pension schemes mandatory.

“If left to benevolence, employers will not register workers with pension schemes. Where this has thrived it is backed by legislation. Time has come for the government to make it mandatory for employers to register their workers with pension schemes,” said a trustee member, Mr Antony Kilavi.

The Alexander Forbes Retirement Fund, established six years ago, was the first multi-employer umbrella retirement fund in East Africa.

It has grown from a membership of two employers to 85 currently, covering 19,000 workers.

If the proposal to make the pension contribution by employers mandatory is accepted by government, the fund will be among those that stand to benefit from increased membership.

Bellevue to revisit contributions

Newly-elected state senator Matt Smith takes the oath of office in Harrisburg on Jan. 1.

 

 By Connie Rankin

Bellevue Council will revisit the issue of how much administrative employees should contribute to the cost of their health insurance.

For the last two years, non-contract employees have contributed 10 percent of the cost of the insurance. This year, the rate was decreased to 7 percent. Recent agreements with the borough’s unions, with the police contract settled by arbitrators, set the contribution rate for union workers at 5 percent.

“The message we’re sending here is if you aren’t in a union, you don’t count,” said council member Kathy Coder after making a motion to prepare an amendment to the borough’s salary ordinance that would reduce the non-contract employees’ contribution rate to 5 percent. She said that this would encourage all employees to unionize.

Even at the 7 percent rate, noncontract employees will save about $400 this year on health insurance due to a switch in plans. With the new plan, employees pay no deductible and have no co-pays.
Regardless, the rate needs to be the same for all employees in order to be fair, said council member Jim Scisciani.

Mayor George Doscher said that the administrative employees had been promised by council that their contribution rate would be adjusted once agreements were reached with the unions. That assertion was disputed by council president Linda Woshner and member Susan Viscusi, both of whom said that no promises had been made and no council votes had been taken on that issue.

Doscher maintained that the adjustment was the result of a “general consensus of council.”

“Maybe nobody spoke it,” Doscher said. “Maybe by your silence it was assumed you agreed.”

Woshner said that it would cost the borough about $4,000 if the contribution rate is decreased to 5 percent.
Voting in favor of the motion to draft an amendment were Coder, Susan Viscusi, Frank Camello, Mark Helbling and Scisciani. Opposed were Woshner, Jim Viscusi and Jane Braunlich.

France revises retirement to 60 for some workers

ARIS, Wednesday

France’s new Socialist government has rolled back an emblematic reform of Nicolas Sarkozy’s administration with a decree lowering the retirement age from 62 to 60 for some workers, a minister said.

The decree, reducing the age limit for people who begin their careers at the age of 18, was agreed on at a cabinet meeting, Social Affairs Minister Marisol Touraine told reporters as she left the meeting.

It will be finalised before the end of the month before being published in France’s official gazette.

Next year around 110,000 people are expected to benefit from the measure at an estimated cost of 1.1 billion euros, an amount expected to rise to 3.0 billion euros a year by 2017, she said.

Up to six months of unemployment and six months of maternity leave can be included in the calculation of the amount of time a worker has to pay into pension funds to benefit from retirement at 60, Touraine said.

This system means that “women who worked and who had children will not be penalised in the calculation of their pension”, she said, adding that the project will be financed by a rise in workers and employer contributions.

Government owes veterans Shs1 trillion - minister

 

In Summary

Mr Kiyonga says govt is working on ways to clear the outstanding debt.

Government owes army veterans Shs1 trillion, the minister of Defence told Parliament yesterday. Responding to a query from Kalungu County MP Vincent Sempijja, Mr Crispus Kiyonga told the House that the government is grappling with a huge backlog of debts due to retired and deceased army officers.

Mr Sempijja asked the minister to inform the House on the types of benefits army veterans are entitled to, the procedure of claiming for the benefits and the efforts being made to pay the veterans their outstanding benefits.

“Over the years many soldier shave passed on, many have retired and many are owed huge sums of money. Government continues to make recommendable effort to ensure that the backlog is finished. The cause of this backlog is lack of money,” Mr Kiyonga said.

“The policy now in the government is to make sure that the backlog doesn’t grow. Anybody who retires now gets what's due to them.”

Complaints
Over the years, there have been complaints about the government’s failure to compensate army veterans, and the long and tedious process involved in accessing monies, especially in times when families try to get money for deceased relatives.

Mr Kiyonga, however, told the House that the Ministry of Defence is working with their counter parts in the Public Service to streamline the process.

“In 2010, a special countrywide exercise was taken to clean the data base to be used in working out benefits,” he said.

He further said that a computerised system has been worked out to ensure that time of retirement is predictable.

In explaining the benefits the veterans are entitled to, Mr Kiyonga told the MPs that some of the benefits include the computed pension and gratuity, which he explained was a lump sum payment made once at the time of discharge of a soldier who had given service for at least nine years at the time of retirement.

iimaka@ug.nationmedia.com

Pension mafia grab extra Shs100 billion

 

Students of Nsambya Hillside High school Nakirebe celebrating after the senior six exams were released. According to the examination board, girls have beaten boys in this year’s exams. Photo by Abubaker Lubowa. 

By ANDREW BAGALA

Posted  Friday, February 22  2013  

The sophisticated masterminds of the pensions scam stole another Shs104 billion in the 2011/12 financial year, police said yesterday.

Detectives investigating the matter say the new figure is separate from the Shs63 billion earlier confirmed stolen by colluding civil servants, bank officials and financial scam artists.

As with the previous uncovered thefts, the money was wired through Cairo International Bank in Kampala. Police say they have uncovered photographs of 1,160 alleged beneficiaries of the money, but many of who are believed to have had their identities stolen in order to facilitate the scam.

Police intend to release the photos of the alleged recipients after failing to contact any of them.
Police spokesperson Judith Nabakooba said the telephone contacts of the suspected pension beneficiaries in the bank accounts list are either out of service or non-existent.

“We are inviting those individuals to CIID headquarters to enable our detectives interview them to ascertain whether they received the actual funds or not,” Ms Nabakooba said yesterday.

“We therefore suspect these could be pictures of innocent persons which were irregularly fixed on the account opening forms in connivance with the bank officials.”

It was not immediately clear how the police will publicise the photographs. This is the second list of suspected beneficiaries of pension funds released by the police since the investigations started last year.

The first list of photographs was in relation to the Shs63 billion that was alleged to Eastern African Community Beneficiaries Association while the second list is linked to Shs104 billion that was paid to retired civil servants in government ministries.

Interdicted permanent secretary in the Public Service ministry Jimmy Lwamafa, principal accountant

Christopher Obey, assistant accountants David Oloka and Steven Lwanga as well as Mr Peter Ssajjabi, the national secretary East Africa Beneficiary Association, are facing corruption related cases in court over payments to suspected ghost pensioners.

Police believe that people’s identities were stolen or made up and used to siphon pensions. Among the photographs released by the police, is one of a regular newspaper contributor, Mr Kavuma-Kaggwa, but is accompanied by the name of Enock Bateeze.

Mr Kavuma, a former civil servant and journalist, said he has not received part of his pension.

abagala@ug.nationmedia.com

US Ambassador ties ‘unchecked’ theft to governance

Scott DeLisi, us ambassordor 

By TABU BUTAGIRA

Posted  Saturday, February 23  2013 at  02:16

In Summary

Rebuttal. Information Minister Okurut says DeLisi’s remarks are “unfortunate”

The US Ambassador, Mr Scott DeLisi, on Thursday, declared that “unchecked and pervasive” pilfering of public resources by bureaucrats is an outcome of the manner in which Uganda is governed.

In some of the strongest comments from the country’s development partners, the envoy said corruption was keeping many genuine potential investors out of Uganda and called for deeper reforms.

“I fear that remedial efforts to address the most immediate donor concerns, although important steps, will do little to tackle the underlying reality that this unchecked virus is inextricably linked to the framework of governance in Uganda today,” Mr DeLisi told an American Chamber of Commerce Investment Opportunities in Energy and Infrastructure summit in Kampala.

Forensic audits and police investigations have lately uncovered theft of at least Shs227b - almost half the Shs585b allocated to Agriculture in the 2012/13 budget – by a cabal of pension managers and civil servants in the Office of the Prime Minister, the Finance Ministry, and the Central Bank.

The graft stories forced European development partners to freeze aid, demanding, among other things, a refund of their stolen monies; reform in public finance management and punishment of culprits. Several officials have either been arrested or remanded in prison.

The US does not give direct budget support to government but is the largest bilateral donor to the country, spending $720m on education, health and military assistance last year, a spending Washington plans to keep in 2013.

At Thursday’s business summit, Amb. DeLisi said: “Over the next few months, the donor community will be watching carefully to see what steps Uganda takes to ensure that the [graft] perpetrators are punished regardless of their status...”

“The Ugandan government must, as a critical first step, be crystal clear in its message that it will not allow, will not tolerate, individuals seeking to enrich themselves at the expense of the interests of the nation and its citizens.”

Because of what he described as “pervasive” corruption, DeLisi noted that Uganda government’s partnership with the donor community is “seriously threatened”.

Aid and investment may still come, he said, “but if real changes are not made, we risk the same results of unfulfilled expectations, misdirected and stolen funds, and a failure to advance the national agenda.”
Information Minister Mary Karooro Okurut yesterday said the envoy’s remarks were “unfortunate”, considering that it was government investigators, and not the US Mission in Kampala, that unearthed the latest grand scams.

“We have taken many [suspects] to jail; prosecution of others is on-going. There’s political will to fight corruption and action is being taken. So, what is the ambassador taking about?” she asked.

Government officials last month took $14m out of the Treasury in a supplementary budget that Parliament is expected to approve retrospectively, to pay up Norway, Sweden and the Republic of Ireland whose donations for rebuilding war-scarred northern Uganda were stolen by senior OPM staff. Anti-graft activists criticised the move, arguing that individuals culpable should have reimbursed the stolen monies, not the government using taxpayers’ money.

Unchecked graft in Uganda has scared business executives in the world’s largest economy from investing here, the envoy noted, before raising questions about government’s capacity to manage expected oil windfall without the temptation on the part of its officials to steal.

Amb. DeLisi threw his weight behind government’s plan to invest in road and energy infrastructure, but cautioned that a “vision, however lofty and commendable, will never be more than a dream” if not implemented.
tbutagira@ug.nationmedia.com

Low income earners to access insurance

The cotton sector has in the last five years registered improvements both in value and volumes. File Photo. 

In Summary

It will be accessible to M-Cash account holders as premiums will only be paid through M-Cash.

KAMPALA

Low income earners, who have for long been unable to afford insurance covers, are set to benefit from a new product that will enable them to pay their medical bills in case of an accident.

The MyLife mobile personal accident insurance product launched by Liberty Life – a life insurance service provider – and MCash – a mobile money payment service provider – provides cover for accidental disability, loss of life as well as hospital cash back in the event the insured is involved in an accident, upon payment of monthly fees of between Shs2,500 and Shs12,500 depending on the plan.

The product has three plans including silver where a customer pays monthly fees of Shs2,500, gold Shs6,250 for the gold plan and Shs12,500 for the platinum plan.

Upon being hospitalised for more than 72 hours, disability or loss of life, the beneficiary or customer is entitled to a lump sum of Shs1 million, Shs2.5 million and Shs5 million for the silver, gold and platinum covers, respectively.

Speaking at the launch of the product in Kampala yesterday, Mr Joseph Almeida, Liberty Life managing director, said the product was driven by the insurance firm’s commitment to create a range of products and solutions to meet customers’ ever changing financial, investment and lifestyle risk situations. “One will never know when an accident will occur and sometimes the unexpected happens when we least expect. ...MyLife will take away the burden of worrying about the financial implication of such an accident,” Mr Almeida said.

Tracking claims
He added that the firm has sophisticated software that enables them to track at any stage claim submitted to ensure prompt settlement after receiving all the required documentation.

MyLife product is expected to improve access to insurance, especially among the lower segment of the population which has for long been untapped and grow penetration rates from the current 0.6 per cent, at which it has stagnated for years. The product, however, will be accessible to M-Cash account holders as premiums will only be paid through M-Cash.

fkulabako@ug.nationmedia.com

Education, development loans available: NSSF

hursday, 21 February 2013 23:07

The NSSF Planning and Investment manager, Mr Mseli Abdallah, talks to Mwananchi Communications Limited (MCL) staff yesterday at the firm’s Tabata Relini headquarters. In the foreground are Bakari Machumu (left) acting MCL group managing editor and NSSF Operations director Crescentius Magori. PHOTO | VENANCE NESTORY

By Sturmius Mtweve
The Citizen Reporter

Dar es Salaam. Members of the National Social Security Fund (NSSF) have not yet fully utilised the loans offered through their respective credit cooperatives due to low awareness, the fund has said.

NSSF offers both education and development loans to its members through their Savings and Credit Cooperatives (Saccos) in the country at lower interest rates compared to market prices.

Education loan which is repaid in two years and a development loan of up to five years are offered at 9.32 per cent and 10.68 per cent respectively but the Saccos add up three per cent to cover their operation costs.
However, up to now, only six Saccos have secured loans worth Sh1.75 billion out of Sh5 billion the pension fund set aside to lend in the year ending June 2013.

“Less than a half of the amount was utilised in the current financial year. We will continue setting aside depending on the demand,” said Mr Mseli Abdalla, NSSF planning and investment manager yesterday.

According to NSSF Operations director Crescentius Magori, the situation has been caused by lack of information and awareness among members of these loan schemes.

He said in order for individuals to access loans from the scheme, they must first be registered members of NSSF and be active Saccos members as well – in which the Saccos will apply for the loan and lend to its members.

The NSSF officials were speaking yesterday to Mwananchi Communications Limited (MCL) workers in a session organised by the firm to appraise its workers on the benefits of joining employee-based Saccos and how the Fund works.

On the other hand Mr Magori said despite the fact that NSSF provides health benefits to its members, most of its members were still spending a lot of money in hospitals -- expenses which NSSF can cover through its benefit programe.