Long-serving pension scheme trustees to work one more term under new rules

Money Markets

Treasury secretary Henry Rotich. PHOTO | FILE 

By OTIATO GUGUYU

In Summary

• Pension schemes trustees who were in office for long periods before the government introduced term limits will be allowed to serve one extra term under new regulations.
• Among a raft of changes, Treasury secretary introduced a clause limiting the term of trustees to two terms of three years each.
• The term limit was introduced to strengthen corporate governance by ensuring boards get a mix of skills, ideas and experience through rotation or alteration in composition.

Pension schemes trustees who were in office for long periods before the government introduced term limits will be allowed to serve one extra term under new regulations.

Managing supervisor at the Retirement Benefits Authority (RBA) Jackson Nguthu said those who were serving as trustees at the time the rules took effect will treat it as the first term of the two allowable by law.

Treasury secretary (CS) Henry Rotich made amendments to the pension rules in the Budget Statement last year.

Among the raft of changes, he introduced a clause limiting the term of trustees to two terms of three years each.

“Those who had served up to June last year will be assumed to be in their first term and can continue holding office,” Mr Nguthu said at the Teleposta Pension scheme and Provident Fund annual general meeting on Monday.

The Sh16 billion fund is electing two members to join its board of trustees in a series of mini elections that will be concluded by June 10.

The meeting was concerned with a trustee who had served in the board for over a decade after a member Nyaturo Orango raised the matter with management.

Mr Nguthu urged the pension schemes to ensure they chose good leaders and use the process to protect their savings.

“Choose a trustee to take care of your funds, a person of integrity who will interrogate the activities of the fund managers,” he said.

The term limit was introduced to strengthen corporate governance by ensuring boards get a mix of skills, ideas and experience through rotation or alteration in composition.

The regulations are, however, silent over whether a trustee could be re-appointed once they have had a break from the board after the six years.

Other changes introduced in the industry include reducing the time frame for the submission of audited annual accounts to the RBA from six to three months.

The new regulations have also expanded the asset classes for investment by allowing pension schemes to invest up to 10 per cent of their assets in private equity funds and venture capital funds licensed by the Capital Markets Authority (CMA).

Mr Nguthu said the regulator was still in talks with the CMA to come up with the guidelines for expansion of investments in private equity and venture capital.