CPF seeks to recover over Sh 29 Billion in debts from Counties

The County Pension Fund (CPF) last week announced a debt recovery plan, in a bruising process that would require at least 3 years if it is to recover over Sh 29 Billion in outstanding debts.

The firm’s group Chief executive Hosea Kili last Wednesday said that the fund – presently valued at Sh 31.3 Billion as at December 2020, would be worth over Sh 60 Billion were it not for the amounting debts, a chunk of which is owed by Counties.

Speaking during the company’s Annual General Meeting (AGM) in Nairobi, CPF’s Kili said that the company will now embark on a rational debt-settlement pact that will involve signed agreements with Council of Governors (COG) and the National Treasury in an attempt to recover the amounts accrued.

The amounting debts in question include assets and liabilities owed to the fund.

“This is a plea we continue to make to our and particularly the County Governments in the recovery of our outstanding debts which we believe if those debts had been paid fully by now, the fund would be worth over Sh 60billion in valuation,” pleaded Mr Kili, adding that the agreement will pave way for possible payments through the National Treasury.

The Scheme’s value stood at Sh31.3 Billion up from Sh33.1 Billion in the same period a year earlier, a 5.14 per cent drop, which the fund blamed on more payouts upon exit from employment by retiring members, as well as the effects of the Coronavirus pandemic.

“This dented the investment environment which in turn yielded lower returns for the fund,” said Kili.

The fund also suffered from dilution by additional provisions for the outstanding contributions from sponsors amounting to Sh 4.1Billion made during the year under review.

The arrears, according to Kili, are dated several years back when the local authorities pensions trust (LAPTRUST) ceased admitting new members.

Laptrust DB Scheme closed its doors to new members in 2011 and in a new Defined Contribution Scheme, Laptrust (Umbrella) Retirement Fund, was registered to meet the retirement needs of new employees within the then Local Authorities of Kenya.

As a result the change saw a host of Counties made slow remittance of contributions by the defunct local authorities and the initial delay by the county governments to handle such inherited liabilities from the local authorities.

The County Pension Fund has over 160 sponsors comprising County Governments and Associated Organizations as well as Independent Organizations who join the umbrella fund for their employees’ benefits.

Late remittances of contributions and failure by some sponsors to remit members contributions in full have continued to exacerbate the situation.

Besides the debt collection process, the firm further aims to focus on three other strategic goals on financial resilience, enhancing investment returns and efficient & responsive service delivery.