Students surf the internet. The Aadhaar unique identification numbers is
India’s most transformational IT project in history. REUTERS
Students surf the internet. The Aadhaar unique
identification numbers is India’s most transformational IT project in
history. REUTERS
By JAINDI KISERO
I have received numerous queries about the
implications of the new rules governing the payment of retirement
benefits, in the wake of the new rules gazetted by Finance minister
Uhuru Kenyatta.
Under the rules, Mr Kenyatta allowed retired people to access benefits that have been sitting with pension schemes since the coming into being of the so-called Mwiraria rules in 2005.
It is clear that a vast majority of retired people have no idea where to lodge their complaints. Some of them have lodged cases with the Kenya National Human Rights Commission, while others, suspecting foul play, ran to the Kenya Anti-Corruption Commission.
Still others have gone to newsrooms in the hope that their plight will be highlighted by the press. Last week, a group of former Uchumi Supermarkets employees stormed the Treasury to lodge complaints to Mr Kenyatta.
The most frequently asked questions include the following: Why are insurance companies holding on to our money when Mr Kenyatta has ruled that we can now access 50 per cent of employer contributions?
How can I be sure that what the administrator has paid me is accurate? How much income tax am I supposed to pay if I withdraw the money?
The confusion among the pensioners is compounded by the fact that Mr Kenyatta’s amendments are being interpreted differently, depending on which expert you speak to.
According to the Retirement Benefits Authority, the minister’s rules did not touch individual pension plans with insurance companies. If your money is with an insurance company, you cannot access employer contributions until retirement age.
As a matter of fact, the RBA chief executive officer, Mr Edward Odundo, last week explained to me that they were considering introducing new amendments to the rules to allow retired people with money sitting in insurance companies to access employer contributions just like their counterparts with money in occupation pension schemes.
The opposite interpretation of Mr Kenyatta’s amendments is the following: that when Mr Mwiraria introduced the rule denying retirees access to employer contribution in June 2005, he did so by amending the occupational regulations rule 19(5). He thus made it impossible for the retired to access employer contributions in occupational schemes.
To circumvent these rules, clever retirees simply transferred the savings from occupation pension schemes to insurance companies from where they could remove all the money blocked by the rules.
In June 2007, Mr Mwiraria’s successor at the Treasury introduced new rules to seal these loopholes. First, Mr Amos Kimunya amended the regulations governing individual pension plans to bar retired people from taking employer contributions from insurance firms.
Secondly, he amended occupational scheme rules which said that employer contributions transferred to individual schemes with insurance companies will have to be blocked as stipulated by occupational rules number 19(5). Thus the Kimunya rules effectively locked in employer benefits sitting with insurance companies from June 2007.
Come September 30 this year, Mr Kenyatta repealed rule 19 (5), the implication of which is that retired people are now allowed access to 50 per cent of the benefits blocked by Mwiraria.
He did not amend the rule barring pensioners from accessing benefits sitting with insurance companies.
Under this interpretation, the argument, therefore, goes as follows: That since Mr Kenyatta’s amendment repealed rule 19(5), which is the amendment which barred retirees from accessing their benefits in the first place, it follows that retired people should now be allowed to access the money, which originated from occupation pension schemes.
Contrary to the position of RBA, no new amendments is required to allow retirees to access what originated from occupational schemes in the first place.
This is the point being made by the former employees of Uchumi Supermarkets. When the company collapsed, the pension scheme was liquidated and the money transferred to insurance companies.
They should be paid their benefits like everyone else. Which of the two interpretations is right?
I claim no authority on interpretation of legal text. Mine is just to highlight the cry of the retired people for a level playing field.
If the spirit of the changes Uhuru introduced was to allow retirees to access the locked funds, let us not discriminate against them.
Under the rules, Mr Kenyatta allowed retired people to access benefits that have been sitting with pension schemes since the coming into being of the so-called Mwiraria rules in 2005.
It is clear that a vast majority of retired people have no idea where to lodge their complaints. Some of them have lodged cases with the Kenya National Human Rights Commission, while others, suspecting foul play, ran to the Kenya Anti-Corruption Commission.
Still others have gone to newsrooms in the hope that their plight will be highlighted by the press. Last week, a group of former Uchumi Supermarkets employees stormed the Treasury to lodge complaints to Mr Kenyatta.
The most frequently asked questions include the following: Why are insurance companies holding on to our money when Mr Kenyatta has ruled that we can now access 50 per cent of employer contributions?
How can I be sure that what the administrator has paid me is accurate? How much income tax am I supposed to pay if I withdraw the money?
The confusion among the pensioners is compounded by the fact that Mr Kenyatta’s amendments are being interpreted differently, depending on which expert you speak to.
According to the Retirement Benefits Authority, the minister’s rules did not touch individual pension plans with insurance companies. If your money is with an insurance company, you cannot access employer contributions until retirement age.
As a matter of fact, the RBA chief executive officer, Mr Edward Odundo, last week explained to me that they were considering introducing new amendments to the rules to allow retired people with money sitting in insurance companies to access employer contributions just like their counterparts with money in occupation pension schemes.
The opposite interpretation of Mr Kenyatta’s amendments is the following: that when Mr Mwiraria introduced the rule denying retirees access to employer contribution in June 2005, he did so by amending the occupational regulations rule 19(5). He thus made it impossible for the retired to access employer contributions in occupational schemes.
To circumvent these rules, clever retirees simply transferred the savings from occupation pension schemes to insurance companies from where they could remove all the money blocked by the rules.
In June 2007, Mr Mwiraria’s successor at the Treasury introduced new rules to seal these loopholes. First, Mr Amos Kimunya amended the regulations governing individual pension plans to bar retired people from taking employer contributions from insurance firms.
Secondly, he amended occupational scheme rules which said that employer contributions transferred to individual schemes with insurance companies will have to be blocked as stipulated by occupational rules number 19(5). Thus the Kimunya rules effectively locked in employer benefits sitting with insurance companies from June 2007.
Come September 30 this year, Mr Kenyatta repealed rule 19 (5), the implication of which is that retired people are now allowed access to 50 per cent of the benefits blocked by Mwiraria.
He did not amend the rule barring pensioners from accessing benefits sitting with insurance companies.
Under this interpretation, the argument, therefore, goes as follows: That since Mr Kenyatta’s amendment repealed rule 19(5), which is the amendment which barred retirees from accessing their benefits in the first place, it follows that retired people should now be allowed to access the money, which originated from occupation pension schemes.
Contrary to the position of RBA, no new amendments is required to allow retirees to access what originated from occupational schemes in the first place.
This is the point being made by the former employees of Uchumi Supermarkets. When the company collapsed, the pension scheme was liquidated and the money transferred to insurance companies.
They should be paid their benefits like everyone else. Which of the two interpretations is right?
I claim no authority on interpretation of legal text. Mine is just to highlight the cry of the retired people for a level playing field.
If the spirit of the changes Uhuru introduced was to allow retirees to access the locked funds, let us not discriminate against them.
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