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.
No comments:
Post a Comment