Court quashes law to streamline counties pension schemes
The planned streamlining of the county governments’ staff pension services has suffered a blow after a court quashed a new law aimed at restructuring and merging the schemes.
The planned streamlining of the county governments’ staff pension services has suffered a blow after a court quashed a new law aimed at restructuring and merging the schemes.
The County Governments Retirement Scheme Act, 2019, also sought to protect savings amounting to billions of shillings held in the retirement funds.
The law required all existing county workers’ retirement benefit schemes to merge into one state corporation under the supervision of the Cabinet Secretary for National Treasury.
But Justice Maureen Onyango said the new law was illegally enacted. She said there was no public participation and Parliament failed to involve key stakeholders such as employees and pensioners during the legislative process in 2018.
Deciding on three petitions filed against the new law, the judge also said the decision of the national government to get involved in the management of pensions for county government staff was in violation of the constitution. She explained that the government’s move was against the Fourth Schedule and Article 6 of the Constitution, which provides that the national and county governments are distinct.
“By regulating pension for county government employees, the national government enters into the realm of regulating terms and conditions of service of employees of county governments,” stated Justice Onyango.
She noted that pensions are employment benefits to be managed by employers under private contracts.
The law came into force on October 7, 2019 following assent by former President Uhuru Kenyatta on September 18, 2019.
It sought to merge theLocal Authorities Pension Trust, Local Authorities Provident Fund (Lapfund) and County Pension Scheme (CPS) to form the County Governments Retirement Scheme within a five-year period. Court papers indicate that currently Lapfund has 52,000 members drawn from the county governments, with a value of Sh36 billion.
Relating to public participation, Justice Onyango found that at the time of enacting the law the Senate failed to notify the public through the media.
“There was no publication in the media inviting the public to participate in the legislative process. Further, there is no evidence that water company employees who were members of the affected schemes were invited,” said the judge. She added that associated organisations whose employees were members of the schemes were also not invited to give their views.
Other beneficiaries of the schemes, such as widows, widower and dependants of deceased employees and pensioners, whom the Act would directly affect were also not given an opportunity to give their views, she said.
During the legislative process, there were protests by the County Government Workers Union, County Pension Fund Financial Services, Pensioners Association and water companies.
Justice Onyango found that the public participation in respect of the Act did not meet the requirements of the constitution. This is because the committee before which the public participation meeting was held was improperly constituted as it did not have quorum as set out under the Standing Orders of the Senate.
In addition, the judge noted that “there was no sufficient time, the stakeholders having been given only one full working day to prepare for the meeting”.
In addition, she found that the Act is in conflict with the County Government Act, the Urban and Cities Act, the Retirement Benefits Act and the Employment Act.
