Sh60bn pension fund not under Treasury, says AG Paul Kihara
The fight for control of the Sh60 billion pension fund for county staff has taken a fresh twist after Attorney-General Paul Kihara Kariuki sided with two administrators who have challenged attempts by the national government to control the scheme.
The AG in an advisory said the Local Authorities Pension Trust (Laptrust) and the County Pensions Fund (CPF) were the rightful managers of the scheme.
The move deals a big blow to the National Treasury, which has since inception of the public service pension scheme in 2012, been opposed the idea that it be administered by Laptrust as the managing director of the CPF Financial Services. Treasury argued that a conflict of interest would arise since CPF Financial Services Limited is Laptrust’s administrator.
The Treasury said Laptrust and its affiliate entities were state corporations and should, therefore, be managed by the ministry as provided for by the State Corporations Act.
But in a confidential letter addressed to the Head of Public Affairs and the National Treasury, the AG clarified that Laptrust and other related entities were public entities.
As such, the pension fund ought to be managed by Laptrust, the advisory stated.
Mr Kihara explained that pension schemes from other entities such as the Judiciary and the courts, commissions, and constituencies, which are defined as public entities under the Public Procurement and Asset Disposal Act (PPDA) 2015, and were not state corporations.
Pension funds
“It is necessary for us to clarify the import of our advice that pension funds for public entities are themselves public entities. It is our respectful advice that the status of an entity as a public entity under the PPAD Act, 2015, does not itself render such an entity a state corporation subject to the State Corporations Act or the Public Finance Management Act,” AG Kihara wrote.
In matters relating to the conflict of interest, the AG opined that Laptrust’s board of trustees could indeed serve as a director in the board of the scheme as this would be “effectively exercising the powers and functions granted to a Trustee under the law”.
So bad have the tiffs been over the control of the fund that the scheme has never commenced its operations because the Treasury has never engaged the CPF Financial Services, formally.
With CPF currently having some 350,000 members and an annual contribution of at least Sh26 billion, neither of the two rival groups is ready to cede control of the scheme to the other. BY DAILY NATION
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