Resolving the staff pension crisis in public institutions

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Editorials

Resolving the staff pension crisis in public institutions


Pension fund concept. FILE PHOTO | NMG

The public pension crisis caused by the management of state-controlled entities must be resolved as soon as possible and the culprits held accountable.

The Postal Corporation of Kenya is the latest to fail to remit staff pensions and gratuities amounting to 1.3 billion shillings. It also withheld 108.5 million shillings from the cooperatives and 305.6 million shillings owed to the banks from which its employees had borrowed.

Auditor General Nancy Gathungu’s findings are shocking but pale in comparison to similar financial repression plaguing other larger-scale state-controlled entities.

The University of Nairobi, for example, had failed to pay pension contributions amounting to 3.2 billion shillings as of June 2020.

It goes without saying that the employees of these institutions face big losses even if they are held to their end of the bargain. Those who rely on their pensions to finance their retirement lifestyle will find this particularly difficult.

It is an offense to fail to remit statutory deductions and there are penalties for doing so, including jail time. But there has been no enforcement of the violations that continue in government institutions.

There is no excuse for this. Entities are not completely bankrupt. They continue to operate and sometimes even receive financial support from the government.

The fact that money owed to employees is withheld indefinitely while spending in other areas highlights the disregard for workers’ rights and impunity in the public sector.

This is a problem that should have been nipped in the bud. Two key players should use their influence to resolve this crisis. The Treasury must develop a strategy to compel institutions to fulfill their obligations to employees.

This may include the requirement to comply with statutory withholding legislation before such organizations have access to funding. Unions must also put pressure on employers to return the sums owed.

They have been strangely silent on this issue despite its grave implications. What we have witnessed are random protests in various parts of the country by frustrated retirees unable to access their retirement benefits.

Justice demands that we do the right thing for our workers.

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