Pain of retirees dying in squalor as State agency sits on Sh2bn pension

Robinson Kuria has been confined to his house and he depends on close family members to help him do everything, including basic grooming.

Life was not always like this for him. He used to be an employee of one of Kenya’s biggest parastatals — the Pyrethrum Board of Kenya (PBK). That made him the envy of many of his jobless friends.

While working, he had built a nest egg that he hoped would help him enjoy a good life in retirement at his home in Kabachia, Nakuru.

After 28 years working for the board, he retired in 2002, looking forward to enjoying the fruits of his labour, and quality time with his five children — three boys and two girls. 

Today, however, Mr Kuria, 77, lives in squalor, pain and misery. He suffered a stroke two years ago and he is unable to pay the medical bills.

Retirement a nightmare

His retirement is a nightmare, just as it is for hundreds of other former employees of the once-vibrant board, which is now a shell.

“I am living a miserable life, yet I worked so hard during my youthful days at Pyrethrum Board of Kenya. I saved money that I thought would help me enjoy my retirement," Mr Kuria lamented.

Mr Kuria’s pain would have been less so if his Sh30,000 monthly pension were forthcoming.

Another former employee, Ms Annabel Ng'endo, a single mother of one, is also suffering a similar plight despite toiling for the government for 29 years.

Now in her early 60s, the woman, who worked for the board from 1978 to 2007, wonders why an employer she worked so hard for would forsake her at her time of need. 

"I have arthritis. I had a hip operation and I have exhausted all my meagre resources as I wait for my pension dues. As senior citizens who worked hard and helped the country earn billions of shillings in foreign exchange, we deserve better treatment. I urge the government to address our plight," said Ms Ng’endo who lives in Racetrack, Nakuru. She expected a monthly pension of Sh20,000.

Their plight echoes those of more than 300 pensioners who are owed more than Sh2 billion by the state agency.

Though living in penury, they are lucky to be around to fight for their cause. Some of their colleagues were not so fortunate.

Dead

More than 40 retirees are reported to have died, mostly of illnesses associated with frustrations as a result of failures by the company now known as the Pyrethrum Processing Company of Kenya (PPCK).

“As we speak today, 46 have died waiting for their pension and we don’t know who will be next. I urge the government to pay the surviving pensioners and their families their dues and prevent further suffering,” said the pensioners’ spokesperson Harun Tinga.

While touring the Nakuru factory last month, Agriculture Cabinet Secretary Peter Munya announced a Sh500 million revival plan for the firm.

He assured the pensioners the government will clear their dues, including the statutory deductions and sacco contributions that were never forwarded.

However, the CS did not give the timelines for when the money will be released.

But even the most optimistic of the suffering pensioners won’t buy into this promise, given past heartbreaks.

Their concern is, if a court order was not effective, what will ever be? 

In 2012, the Retirement Benefits Authority (RBA) filed a petition in court for the winding up of the PBK Staff Superannuation Scheme, which had been established in 1991.

Later, it was constituted as a defined benefits scheme in 1995 and subsequently registered by the authority in 2011.

The RBA had moved to court after an investigation of the scheme in June 2012 uncovered financial problems.

Scheme insolvent

The scheme was found to be insolvent. It had Sh734 million debts, yet its assets were only valued at Sh16.8 million. This meant the scheme’s funding ratio was a low 2.3 per cent, contrary to the stipulated minimum funding level of 100 per cent.

At the time, the court heard that the pension payments due to the members were in arrears for more than six months and growing at Sh2.5 million monthly.

The RBA told the court that the financial position of the scheme’s sponsor, PBK, was worsening, citing salary arrears and unremitted contributions to the scheme.

The scheme was unable to pay the 41 members of the scheme the pension benefits due to them as directed by the authority and upheld by the Retirement Benefits Appeals Tribunal in 2011, the court heard.

“The scheme was unable to present a remedial plan acceptable to the authority, owing to the failure by the sponsor to endorse the scheme’s remedial plan, citing low business and inconsistent cash flows,” the RBA told court as it sought orders to sell off its assets.

But in a replying affidavit, Elizabeth Kabiru, the chairperson and a trustee of the Pyrethrum Board of Kenya Staff Superannuation Scheme, said the sale of PBK’s non-core assets will raise Sh300 million, which together with a Sh200 million government bailout would add to a total working capital of Sh500.

This amount would be sufficient to “retire debts and enable the sponsor to resume monthly payments to growers and thereby become self-sustaining”.

Incorrect payments

PBK also argued that some members of the scheme had been “incorrectly paid large sums of benefits in 1994, following the winding up of the sponsor’s provident fund”.

The court heard that the petitioner had promised to recover the said incorrect payments, but had yet to act in spite of several requests by the respondent for assistance.

“It is not true that the scheme is insolvent to the tune of Sh717,288,000 as alleged, since the same is informed by inaccurate actuarial assessment report,” Ms Kabiru stated.

Justice Farah Amin noted the sponsor's own difficulties meant that it could not continue funding the scheme. 

In addition, the judge observed, the scheme had defaulted in pension payments since December 2011.

“Bearing in mind the size of the deficit and the rate at which it is growing, the scheme could be unable to pay its debts. Add to that the fact that there are substantial arrears of payment, it is clear that the scheme is de facto unable to pay its debts and therefore insolvent,” Justice Amin ruled on December 1, 2016, as he granted orders to liquidate the scheme.

“It is also ordered that all proceeds recovered from the winding up of the scheme shall be shared equally between the current members whether pensioners in receipt or contributories,” the judge added.