KBC staff demand Sh18 billion

Members of the Kenya Broadcasting Corporations (KBC) staff retirement scheme are demanding Sh18 billion from the state broadcaster, a move likely to deepen financial woes of the cash-strapped corporation.

According to computations filed in court by the Board of Trustees KBC Staff Retirement Benefits Scheme, the employees are owed Sh18,421,704,159.

The national broadcaster has been deducting monthly contributions but failing to remit as required by the Retirement Benefits Act, court papers indicate.

Documents filed by the board’s lawyer Morara Omoke indicate that the withheld funds are from pension contributions and income from their rental houses (rent collections) from 2011 to date. The non-remittance caused the scheme’s funding level to deteriorate, exposing it to massive risks, the lawyer says.

Mr Omoke filed the computations following an order by Labour Relations Court judge Maureen Onyango in April 2022.

Compound interest

The judge had also ordered the national broadcaster to pay three per cent compound interest per month from the date the suit was filed in 2018.

Lawyer Omoke yesterday got victory after the judge thwarted the intention of the Retirement Scheme’s Board of trustees to drop him from the suit and replace him with the law firm of Gichamba & Company Advocates. The latter had filed a notice of change of advocates, which was struck out by court.

The court found that the attempts were done unlawfully and unprocedurally. In opposing termination of his services, Mr Omoke argued that the board wanted to use the new law firm to file fresh computations discounting the claim of Sh18 billion owed to the KBC Pension Scheme without the consent of all members of the scheme.

“The computations as at the date of the judgment amount to Sh18,421,704,159, but the trustees of the KBC Staff Retirement Benefits Scheme are suggesting a sum of Sh6,369,152,342, which is a reduction of approximately 65.4 per cent,” Mr Omoke said.

He stated that reducing the claim was an illegality and that the computations suggested by the trustees were not in line with the orders of the court in the judgment delivered on April 27.

Additionally, the suggested computations are in contravention of Section 53 of the Retirement Benefits Act.

Incurring penalties

The national broadcaster has been struggling to honour the dues, a report by Auditor General Nancy Gathungu for the year indicates, underlining the deepening cash flow crisis it is facing and signaling economic pain for its employees.

“The corporation is exposed to the risk of incurring penalties and interest with the continued delay in remittance of the deductions,” the report says.

As a result of KBC's failure to remit employees' contributions together with its own, according to the lawyer, the low funding level had exposed the scheme to massive risks.

Mr Omoke said non-remittance had also exposed the scheme to regulatory censure by the Retirement Benefits Authority (RBA), including the threat of winding up.

He said there was apprehension that the KBC staff, members of the Scheme, will retire into poverty since the employer was not discharging its obligation. Remittance of statutory and members' deductions to the pension schemes, Saccos and banks are mandatory employer obligations.

"At least 70 per cent of KBC employees are aged over 48 years and are living in fear of retirement given that they will neither receive pension lump sum nor be eligible for pension income because of the financial damage directly caused by the State broadcaster," said the trustees in court.

As a result of KBC's failure to remit employees' contributions together with its own, according to the lawyer, the low funding level exposed the pension scheme to massive risks.

The case will be mentioned on October 31, 2022 to adopt the computations.

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