Nairobi County employees risk losing pension funds over City Hall’s Sh13b debt
Employees over the age of 55 in Nairobi County risk losing out on their pensions after Local Authorities Pension Trust (Laptrust) threatened to stop the payments because of a Sh13 billion debt owed by City Hall.
Appearing before Nairobi Assembly’s Public Accounts Committee (PAC) to respond to audit queries on Wednesday, Laptrust chief executive Mr Hosea Kiili stated that the county government of Nairobi had not remitted deductions from the workers since 2013 despite the workers’ pay slips showing that such deductions have been made.
Mr Kiili said that out of the 47 counties in the country, only two have been defaulting in remitting their deductions with Nairobi County being the main culprit and yet it has the highest number of employees in the scheme.
He said in six months, the county has only remitted deductions for two moths while defaulting on the other four.
“We have never defaulted in paying pensioners and even now we are processing pensions for retiring pensioners. Other counties have been remitting their deductions without failure. We are now forced to sacrifice what is coming from other 45 counties to pay pensioners from Nairobi,” said Mr Kiili.
He said that they had an agreement with the county to be remitting Sh132 million on the tenth day of every month to the Scheme yet that agreement has not be honoured.
City Hall has more than 13,000 county employees out of whom 9,600 save with the Scheme with 550 workers from the county retire every year.
Mr Kiili added that of the more than Sh50 billion Laptrust pays out to its 8,000 pensioners countrywide monthly, about 60 per cent goes to retirees from the county government of Nairobi yet it is the principal defaulter.
“City Hall has a principal of Sh6 billion in debt which has acquired a compounded accrued interest of Sh5.5 billion over the years plus an actuarial deficit of Sh1.1 billion which is determined after every three years,” he said.
He said that under the regime of former governor Dr Evans Kidero, they formed a task force comprising members from the Nairobi executive and from Laptrust to look into the settlement of the debt in March last year when the debt was only Sh8.8 billion.
Nothing much came out of the task force, he said.
“We request that they honour our agreement because the debt keeps on increasing at Sh241 million per month when interest is included due to non-compliant. If the county assembly does not intervene, then I will be forced to stop paying pensions due to lack of funds,” Mr Kiili said.
INTERESTS AND PENALTIES
The Laptrust boss said the problem started with the now defunct county council and was continued by the county regimes.
The council, he says, in an agreement signed in January 2011 made a commitment to pay part of the debt in cash and the remainder through property swap.
The scheme was to waive 50 per cent of the total interest and penalties if the council honored the deal, but the council failed to keep the promise.
He said that the county paid Sh2.3 million in cash and offered some estates like Jevanjee/Bachelors Quarters valued at Sh1.8 billion, Old Ngara valued at Sh927 million and New Ngara which was worth Sh1.8 billion.
Also offered were Kariokor and Buru Buru estates but the deal collapsed after the Transition Authority stopped the transfer in 2012.
“We have no interest in Nairobi county properties and we have not received any. It is a deal being dangled by the executive but a beggar has no choice and what we want is the debt in cash,” he said.