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July 23, 2018

Bill proposes new pension plan for county workers

National Assembly Speaker Justin Muturi in Parliament on Tuesday / HEZRON NJOROGE
National Assembly Speaker Justin Muturi in Parliament on Tuesday / HEZRON NJOROGE

The county governments’ members of staff will be obliged to join a new umbrella pension scheme which will replace the Local Authorities’ Provident Fund.

If the County Pension Scheme Bill, 2017, which was introduced in the National Assembly sails through, the County Pension Scheme will be created to replace LapFund.

Currently, the retirement contributions for county government staff are managed by LapFund, which was established in 1960. “The principal object of the Bill is to establish the County Pension Scheme as a mandatory umbrella pension scheme for all county government officers,” the Bill reads in part. The Bill, introduced by Mbeere North MP Muriuki Njagagua, seeks to have the Scheme’s board of trustees whose tenure should be four years renewable once based on performance.

Read: Blueprint for county staff pension fund

“The proposed Scheme will provide one umbrella pension scheme for all 47 county governments besides being open to other persons approved by the Board,” it states.

The Bill prohibits employers from deducting more than Sh240,000 – 30 per cent – of the employees’ pensionable income as enshrined in the Income Tax Act.

The Scheme will be managed by Fund managers, custodians and corporate administrators.

All officers and staff employed by a county government, agency, corporation or associated organisation shall, after the commencement of the County Government Act, subscribe to the County Pension Fund established under the County Pension Scheme Act.

“Contributions by and in respect of an employee shall cease to be payable from the day he reaches his normal retirement date or from any earlier date upon which he ceases to be a member of the Scheme.”

Last week, LapFund hinted that it would incorporate Kenyans working at the diaspora and informal sector to catapult its membership drawn from the 47 counties.

Read: CoG wants say in pension bill

LapFund’s chief executive officer David Koross announced that they are targeting 100,000 members in the next financial year, up from its current membership of 34,000. 

In 2014, governors wanted the government to investigate the Local Authorities Provident Fund over claims it was overcharging its members.

The county chiefs were forced to seek redress after it emerged that LapFund charges county employees over and above the statutory requirement.

Governors James Ongwae (Kisii) and Jackson Mandago (Uasin Gishu) told the Star the matter is a “serious problem” that requires the immediate intervention of the State. They wanted the Auditor General to order refunds.

 

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