Telkom seeks review of Sh13bn pensioners’ claim
What you need to know:
- Firm says it fears its pension scheme will collapse if forced to pay the entire sum.
- Although the financial claim amounting to Sh13.9 billion has been confirmed by the trustees of the Telposta Pension Scheme, they have asked the High Court to decline the retirees’ push for payment.
- The money has increased due to interest. According to Mr Raichura, as at June 30, the pensioners’ dues had increased to Sh11.5 billion and by October 3, this had risen to Sh13.9 billion.
Retirees of Telkom Kenya are seeking over Sh13 billion of withheld pension from the state-owned firm, a sum that the company says it cannot pay in whole.
Telkom fears that its pension scheme will sink into financial distress and be wound up should the retirees be paid the money demanded.
Although the financial claim amounting to Sh13.9 billion has been confirmed by the trustees of the Telposta Pension Scheme, they have asked the High Court to decline the retirees’ push for payment.
They say the payment will put the scheme under insolvency.
“It is our opinion that in the event the scheme is to be compelled to settle the Sh13.9 billion, it would have a very significant impact on its existence with a very imminent possibility of being put under insolvency,” states the trustees through Oraro & Company Advocates.
In response, lawyer Titus Koceyo for the over 13,000 pensioners said that the benefits owed are for social protection accorded to the older members of the society by the constitution.
“It would be unfair, unjust and unlawful to deny the retirees their accrued pension benefits at the trustees' own convenience,” says Mr Koceyo.
A report on the financial standing of the scheme prepared by Mr Sundeep Raichura (an actuarist) indicates that paying the pensioners will push the scheme into a massive deficit.
Initially, the amount owed was Sh7.2 billion, according to a judgment delivered on February 13, 2017, by the Retirement Benefits Authority Tribunal.
But the money has increased due to interest. According to Mr Raichura, as at June 30, the pensioners’ dues had increased to Sh11.5 billion and by October 3, this had risen to Sh13.9 billion.
The scheme is seeking a review of the 2017 judgement on the basis that “the additional liability would significantly prejudice the financial security of all the members of the scheme including the petitioners”.
The Attorney-General, on the other hand, has asked the court to compel the scheme to pay the pensioners.
The AG, who is defending the judgement by the five-member tribunal comprising Kakai Cheloti, Veronicah Owende, Job Momanyi, Muthomi Thiankolu and Simon Barmasai Bullut, said that the decision rendered in 2017 is legally binding.
In the suit, the Board of Trustees of the pension scheme have named the Retirement Benefits Appeal Tribunal and the AG as respondents while Retirement Benefits Authority and the pensioners are interested parties.
The AG has supported Mr Koceyo’s argument that the pensioners are entitled to their benefits.
The AG said even if the pensioners exited at the age of 50 or 55 years they are entitled to their terminal dues.
“In reaching the verdict, the tribunal held that the correct way of computing the benefits due to the pensioners is to apply the rules of the scheme on accrued benefits,” stated the AG in an affidavit sworn by Mr Fred Gekonde from the tribunal.
A pensioner, Boniface Mariga, who exited from Telkom Kenya in 2007, said the amounts paid as pension were refunds contributed by the retirees into the pension scheme plus interest.
The trustees’ application for review of the tribunal’s judgment will be heard by the court on November 31, 2022.