Pension schemes seek penalty waiver

Guests follow proceedings during the Association of Retirement Benefits Scheme 20th AGM in Nairobi last week. PHOTO | SALATON NJAU 

By JAMES KARIUKI
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Pension scheme administrators have urged the government to waive interest and penalties on delayed remittances to the Unclaimed Financial Assets Authority (Ufaa).

The Association of Retirement Benefits Schemes (ARBS) chairman Simon Nyakundi said his members were ready to engage Ufaa and establish a common ground for release of funds whose...
beneficiaries remain untraced for decades.

“Only 136 schemes have complied out of 1,280 schemes and that shows the need for talks on waiver as an incentive for compliance. This is now possible since the law was changed ending the perpetual conflict on the role of pension schemes as trust fund holders,” he said.

Speaking in Nairobi during ARBS annual general meeting, Mr Nyakundi said pension scheme trustees lacked finances to be spent on tracing claimants whose monies were then held in abeyance. During the AGM, members lamented the hefty penalties and interest charged on delayed disbursement of unclaimed funds saying they make it impossible for them to comply.

For instance, a scheme that failed to remit Sh1 million since Ufaa launched operations four years ago risks paying the principal amount together with penalties and fines totalling Sh15 million.

Ufaa has said it is in talks with Treasury seeking a review of the law to ease fines from Sh50,000 to about Sh7,000 a day as well as the 25 percent interest rate a month. Chief executives of the offending entities also risk a jail term and hefty fines in their individual capacities.

The meeting heard that Ufaa still held Sh13 billion remitted by various private and public entities out of a possible Sh500 billion as well as 564 million units of securities whose owners were yet to be traced. Ufaa said it will soon start enforcing the penalties once ongoing audits on different entities are completed.

Sources of the funds have mainly been uncollected salaries and benefits, pension, unit trusts, mature policies, unclaimed dividends, money in dormant mobile, bank and sacco accounts that remain uncashed for more than two years.

The agency currently holds 1,047 safe-boxes containing valuables such as jewelry, share certificates and title-deeds, among others, whose custodians, mainly banks, insurance companies and saccos, surrendered to the parastatal.