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In an advertisement published in local media on Sunday and Tuesday, the
NHIF directed civil servants and members of the disciplined forces to
seek medical help from any provider in the list.
By JEVANS NYABIAGE
Nairobi,Kenya:The split of the defunct Kenya Posts and Telecommunications Corporation (KPTC) continues to pose pension dilemma for former employees, more than a decade later
Several employees of the former parastatal are contesting the
formula used by Pension Schemes to calculate the amount paid to them as pension.
In
what is expected to set a precedent and see a floodgate of cases, the
Retirement Benefits Appeals Tribunal sitting in Nairobi ruled that the
Postal Corporation of Kenya Pension Scheme erred in its calculations of pension figures of a former employee.
The
tribunal said the scheme should have based its calculation on the KPTC
rules. It ordered that the Pension Scheme calculate and pay the
appellant’s benefits in accordance with the rules of the KPTC Pension
Scheme.
“In the upshot, we make the following orders; the appeal
be and is hereby allowed,” ruled the Tribunal. According to documents
filed at the Tribunal, Samuel Okeyo Aduar, was employed by the
Corporation on January 31, 1980. It said that by virtue of this
employment, he became a member of and was entitled to receive benefits
from the Corporation’s Pension Scheme.
Transfer of services
During
the liberalisation of the telecoms industry, KPTC was split into Telkom
Kenya, Postal Corporation of Kenya and the Communications Commission of
Kenya. Okeyo’s services were transferred to the Postal Corporation of
Kenya.
The Kenya Communications Act, Section eight of the Third
Schedule says Where any person whose services are transferred to the
Commission (Communications Commission of Kenya), the company (Telkom
Kenya), or the Corporation (Postal Corporation of Kenya), is on the
vesting day, a member of any statutory or voluntary pension scheme or provident fund.
By
a Trust Deed and Rules dated February 20, 2003 Postal Corporation of
Kenya established Postal Corporation of Kenya Staff Pension Scheme. It
commenced on January 1, 2002. When Okeyo retired in 2003, he was paid on
the terms of the Postal Corporation of Kenya Pension Scheme, what he
says was erroneous.
The Tribunal chaired by Justice (Rtd) Shaikh
Amin said it is common ground that by reason of Section 8 of the Third
Schedule headed Transitional Provisions of the Kenya Communications Act,
1998 the pension
scheme is liable to pay retirement benefits to the appellant. On June
3, 2003, the Trustees of the Pension Scheme calculated and paid to Okeyo
the equivalent of Sh416,141 of his accrued pension.
On
April 8, 2011, Okeyo filed a complaint with the Retirement Benefits
Authority (RBA) against the Postal Corporation of Kenya Staff Pension
Scheme as per Section 46(1) of the Retirement Benefits Act.
Error in calculation
He alleged that the trustees of the Scheme fell in error in calculating his benefits under the pension scheme’s rules and that they should have used those of KPTC Pension Scheme
The Tribunal referred the Appeal to the chief executive officer of RBA to consider the appellant’s complaint. By a letter dated July 16, 2012, RBA chief executive caused more confusion. The Authority said it was satisfied that Okeyo’s retirement benefits were computed correctly in accordance with the provisions of the Telposta Pension Scheme Rules prevailing at the time.
“We do not know why reference is being made to another Scheme and not the Postal Corporation of Kenya Pension Scheme,” the Tribunal, whose other members are Barnabas Kariuki, Naftal Juma and Joseph Kamiri, said.
“Our reading and understanding of Section 8 of the Third Schedule headed Transitional Provisions of the Kenya Communications ACT, 1998 is that the Rules of the KPTC Pension Scheme continued to apply to the appellant even when he became Member of the Postal Corporation of Kenya Pension Scheme is entitled to protection and benefit of the law.”
It said these are the interests Trustees of the Postal Corporation of Kenya Pension Scheme as fiduciaries are required to take into account and the RBA to ensure are protected in the Scheme Rules of the Postal Corporation of Kenya Pension Scheme. “The Trustees of the Postal Corporation of Kenya Pension Scheme were wrong to use their Rules only to calculate the Appellant’s benefits,” the Tribunal said.
Regulator faulted
Guided by Sections 5 and 24 of the RBA, It said the RBA ought to have directed the Trustees of the Postal Corporation of Kenya Pension Scheme to amend their Scheme Rules.
This was toprotect the interests of the Appellant and Postal Corporation of Kenya by ensuring compliance with the Kenya Communications Act, 1998. Also to calculate and pay the appellant’s benefits in accordance with the Rules of the KPTC Pension Scheme in which RBA acted erroneously. However, this is not the only case. There has been a floodgate of suits as pensioners return to haunt their former employers for more compensation. To date, a dozen of companies have been compelled by either courts or the Retirement Benefits Appeals Tribunal to pay millions of shillings to retirees with banks being the worst hit.
A cursory glance at judicial records unearths a number of cases touching on pension matters. Former employees of several banks including National Bank of Kenya, Barclays Bank of Kenya, Stanchart, Stanbic Bank, Kenya Airports Authority, Telkom Kenya, PostBank among others have in the past sued their former employer over what they claim to be illegal deductions and underpayment of benefits.
He alleged that the trustees of the Scheme fell in error in calculating his benefits under the pension scheme’s rules and that they should have used those of KPTC Pension Scheme
The Tribunal referred the Appeal to the chief executive officer of RBA to consider the appellant’s complaint. By a letter dated July 16, 2012, RBA chief executive caused more confusion. The Authority said it was satisfied that Okeyo’s retirement benefits were computed correctly in accordance with the provisions of the Telposta Pension Scheme Rules prevailing at the time.
“We do not know why reference is being made to another Scheme and not the Postal Corporation of Kenya Pension Scheme,” the Tribunal, whose other members are Barnabas Kariuki, Naftal Juma and Joseph Kamiri, said.
“Our reading and understanding of Section 8 of the Third Schedule headed Transitional Provisions of the Kenya Communications ACT, 1998 is that the Rules of the KPTC Pension Scheme continued to apply to the appellant even when he became Member of the Postal Corporation of Kenya Pension Scheme is entitled to protection and benefit of the law.”
It said these are the interests Trustees of the Postal Corporation of Kenya Pension Scheme as fiduciaries are required to take into account and the RBA to ensure are protected in the Scheme Rules of the Postal Corporation of Kenya Pension Scheme. “The Trustees of the Postal Corporation of Kenya Pension Scheme were wrong to use their Rules only to calculate the Appellant’s benefits,” the Tribunal said.
Regulator faulted
Guided by Sections 5 and 24 of the RBA, It said the RBA ought to have directed the Trustees of the Postal Corporation of Kenya Pension Scheme to amend their Scheme Rules.
This was toprotect the interests of the Appellant and Postal Corporation of Kenya by ensuring compliance with the Kenya Communications Act, 1998. Also to calculate and pay the appellant’s benefits in accordance with the Rules of the KPTC Pension Scheme in which RBA acted erroneously. However, this is not the only case. There has been a floodgate of suits as pensioners return to haunt their former employers for more compensation. To date, a dozen of companies have been compelled by either courts or the Retirement Benefits Appeals Tribunal to pay millions of shillings to retirees with banks being the worst hit.
A cursory glance at judicial records unearths a number of cases touching on pension matters. Former employees of several banks including National Bank of Kenya, Barclays Bank of Kenya, Stanchart, Stanbic Bank, Kenya Airports Authority, Telkom Kenya, PostBank among others have in the past sued their former employer over what they claim to be illegal deductions and underpayment of benefits.
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