Egerton University suffers blow in bid to lower pension contribution
Egerton University’s management has suffered a blow after the court stopped it from reducing the mandatory pension contribution to the Egerton Retirement Benefits Scheme.
The management, which is facing a massive financial crisis that has paralysed most operations at the Njoro campus, had written to trustees of the scheme notifying them of the intention to vary contributions from 20 per cent to one per cent.
However, the University Academic Staff Union (Uasu), Egerton chapter, moved to court seeking orders to stop the move. In court papers, Uasu Egerton Chapter is named as the claimant while Egerton University, the University Council and the Vice Chancellor are named as first, second, and fourth respondents respectively.
The board of trustees Egerton University Retirement Benefits Scheme, Kenya Universities Staff Union Egerton branch and Retirement Benefits Authority (RBA) are named as first, second, and third interested parties.
Uasu argued that the reduction bordered on neglecting and abandoning the scheme by the employer.
“If our employer is allowed to contribute one per cent and the employee 10 per cent, which is 10 times what the employer contributes, that is against the law and that was our main argument,” argued Grace Kibue, secretary of Uasu’s Egerton chapter.
Delivering his orders at the Nakuru Employment and Labour Relations Court last week, Justice David Nderitu said: “Pending the hearing and determination of the said application inter-partes, an order is hereby issued in the nature of a temporary injunction, restraining the university management from varying its contributory obligations to the Egerton Retirement Benefits Scheme with respect to claimants membership from 20 per cent to one per cent of the basis of a notice to the second interested party issued by the respondents on June 27, 2022 or any other notice issued on any other date.”
Justice Nderitu further ordered the parties or their counsel to appear before the court on March 21 for further directions.
The latest report by Ronalds LLP, a certified Public Accounts firm, reveals that the retirement benefits scheme is owed more than Sh2.1 billion by the employer who has failed to remit monthly contributions.
A Retirement Benefits Authority (RBA) official, who did not wish to be named, said it was not well with the scheme particularly, due to unremitted contributions.
However, he assured members that the regulator would effect a remedial plan to ensure scheme sponsors remit their contributions on time.
“We know what is happening with the public universities' pension scheme and have raised these concerns with the National Treasury to find a lasting solution. We have a task force looking at public pension schemes, particularly those facing financial challenges,” said the RBA official.
Egerton’s 84-year-old Njoro campus is struggling to meet its obligations in form of pension funds remittances, remitting staff loan deductions to lenders, statutory deductions and payments to suppliers and contractors.
The university’s debt burden crossed the Sh9 billion mark last year and is still climbing.
Subsequently, the management issued a redundancy notice, announcing that about 200 employees would be sent home.
In a bid to reduce its ballooning wage bill of Sh248 million, the university has dropped eight degree programmes that have not been attracting students.
Egerton’s Njoro campus and other public universities facing financial constraints have been described by the Auditor-General as "technically insolvent".