Former Telkom-K staff closer to long-contested pension dues
Teleposta towers on Kenyatta avenue, Nairobi.
They describe themselves as retired, old, poor, sickly and some are enduring life-threatening diseases.
Their problems, they argued, have been compounded by their pension, which is still being withheld yet they have been in corridors of justice for more than a decade.
Last week, however, the former employees of Telkom breathed a sigh of relief when the High Court dismissed a petition seeking to quash a decision directing Teleposta Pension Scheme to recalculate their pension dues as directed by the Retirement Benefits Appeals Tribunal in 2017. The dismissal of the case inches them closer to getting their dues.
The retirees are former employees of Kenya Post and Telecommunications Corporation and they have been battling in court with their former employer after they allegedly discovered that they were underpaid their pension benefits upon retirement.
The retirees first lodged a complaint before Retirement Benefits Authority (RBA) arguing that between 2010 and 2011, Telkom Kenya caused an actuarial calculation to be done on the net accrued pension payable, after leaving service.
Through lawyer Titus Koceyo, the pensioners said they found out that the scheme had incorrectly computed amounts due to them and as a result, were underpaid contrary to the Trust Deed and Rules of the Scheme.
It was their argument that the underpayment was illegal because the scheme failed to disclose the applicable factors and methods used in the computation of pension benefits, and miscalculated the early retirement and nominal retirement benefits.
Mr Koceyo submitted that the scheme failed to publish the actuarial factors that would be used.
What followed has been a back-and-forth fight moving from the RBA, Retirement Benefits Appeals Tribunal, the Employment and Labour Relations court, High Court and even the Court of Appeal.
It now appears that there is light at the end of the tunnel after High Court judge John Chigiti dismissed the scheme's petition seeking to quash a directive by the Retirement Benefits Appeals tribunal compelling the trustees to recalculate the former employees pensions dues.
The scheme expressed fears that failure to quash the decision made in 2017 might hugely impact the financial security of all the members of the scheme, who are currently about 10,000.This is because the scheme might be forced to pay out up to Sh13.9 billion.
Doctrine of proportionality
“It is this court’s finding and I so hold, that as the court applies its mind to the doctrine of proportionality it must also weigh the negative impact the application will have on the decree holder and in this case the pensioners,” the judge said.
Telkom through senior counsel George Oraro submitted that forcing them to make the payment would have a very significant impact on the existence of the scheme, with a possibility of it being put under.
The judge ruled that fragile pensioners did not get an opportunity to swear affidavits to tender evidence demonstrating the pain and suffering they have been “forced to endure as they crawl through the dark tunnel of time as they try and wait to access their retirement entitlements”.
According to Justice John Chigiti, some might have already died empty handed.
“It is this court's firm belief and I so hold, that the effect of the application of the proportionality test as sought by the applicant will erode the pensioner’s entitlements and rights that flow from the judgment,” the judge said.
The main issue on appeal was the basis for computation of the lump sum payment instead of retaining a deferred pension in the scheme after leaving service.
The court heard that with respect to the members who resigned or left employment before the normal retirement age but having completed five years of service or retired before attaining the age of 50 under specified circumstances, the scheme rules provided for a deferred pension payable from the normal pension date.
After hearing the case, the tribunal noted that a report by NBC Holdings Proprietary (Pty) Limited of South Africa, indicated that there was variance in the amounts received by the retirees. Telkom on its part relied on figures calculated by Alexander Forbes Financial Services (EA) when they paid the workers who had retired.
The tribunal had ruled that any computations of benefits by an application of a discounting at age 55 is contrary to regulations in so far as it reduces accrued rights and interest of the retirees and the obligation of a trustee to act in the best interest of a beneficiary.
The scheme moved to the High Court arguing that the parties had agreed by consent before the tribunal that the two actuaries, Alexander Forbes and International Actuarial Consultants (IAC) to meet to narrow down areas of difference and present a joint report.
NBC Holdings
However, instead of relying on the reports by IAC, which was the basis of their claim, the retirees allegedly abandoned their original claim and introduced and sought to rely on an entirely different set of calculations prepared by NBC Holdings.
According to Telkom, by directing the scheme to compute the benefits owed to the retirees, the tribunal effectively abdicated its role and delegated it to the scheme.
Further, the scheme argued that the tribunal entertained an appeal from parties who had not filed complaints before the RBA.
The court was informed that the tribunal allowed the introduction of 348 retirees and new issues that had not been raised by the pensioners in the original proceedings.
That scheme also faulted the tribunal saying it exercised a discretion that it did not have, by prescribing that a factor for 55 years should not be used when computing the amount due to the pensioners when the same was expressly provided for in the Trust Deed and the Rules and without providing for an alternative age and their basis.
Mr Oraro submitted that the rules provided that a member could only retire from service at or after age 50 before the age of 55 with the employer's consent and that they did not have an automatic right to receive an unreduced pension at the age of 50.
Additionally, the scheme rules expressly provide that on leaving service for any reason before the age of 50 years, the benefit entitlement was a deferred pension payable from the normal pension date (age 55) based on the formula set out.
Mr Oraro said the scheme is entitled to the reliefs sought- of quashing the decision of the tribunal and prohibiting the enforcing the decision.
“I dismiss the Applicants’ (Teleposta) argument under the doctrine of proportionality. However, it would be remise of me to shut doors to the doctrine of proportionality in judicial review matters in appropriate cases,” the judge added.
