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CPF goes after County debts owed to Laptrust DB Scheme

The County Pension Fund (CPF) has begun talks with various County Governments in an attempt to recover over Sh6 Billion owed to local authorities pensions trust (LAPTRUST) in outstanding debt.

CPF financial services group managing director, Hosea Kili without revealing details of those talks, expressed confidence that the arrears dated several years back when Laptrust seized admitting new members, would be reimbursed as part of the pending bills.

“We are talking billions of shillings in outstanding debts, and those talks have begun in earnest. We will reveal details of counties in question and we are also confident that the amounts will be paid as part of pending bills owed to suppliers by Counties,” said Mr. Kili.

Laptrust DB Scheme whose current membership stands at 26,000, closed its doors to new members in 2012 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.

With a fund value of Sh33.4 Billion as of December 2020, the outstanding Counties’ debts is feared may have attracted hefty penalties and interest charges over time.

The County Pension Fund (CPF) has a current membership 54,000 with the fund valued at Sh19.6billion.

“One of the main contests for the Scheme remains the issue of debt owed by sponsors.

Late remittances of contributions and failure by some sponsors to remit members contributions in full have continued to exacerbate the situation. While part of the debt was inherited from the now defunct local authorities, some county governments have subsequently piled up a substantial amount of debt, post devolution,” said Kili.

The National Treasury in January 14 disbursed Sh 24.6 billion to county governments as part of their Equitable Share.

The January disbursement now brings the total balances for the various county governments now held at Central Bank of Kenya (CBK) to Sh 61.4 billion.

“And in this respect we once again appeal to them to make full and timely use of these funds, as additional disbursements from the exchequer are made in due course. Further, it’s our hope that county governments will prioritize the settlement of pending bills to suppliers as well as other statutory dues to enable concerned institutions to discharge their mandates effectively,” said Treasury CS Ukur Yatani.

Further, in February 2020, Treasury released Sh151.4 billion to all the 47 county governments as their equitable share of revenue raised nationally in that financial year – but most of those funds were either inappropriately utilized on misplaced priorities or looted by County officials.

As at June 30, 2018, auditor reports show that out of Sh88.98 billion pending bills presented for audit to the Office of the Auditor-General, bills amounting to Sh51.2 billion or 58 percent were reported as payable.

However, bills amounting to Sh37 billion or Sh42 percent lacked sufficient documentation to support services rendered or work done and, therefore, were not recommended for payment.

In the latest disbursement by treasury to Nairobi County for instance, City Hall will clear more than Sh3 billion owed to suppliers after the High Court unlocked funds for the county’s Sh37.5billion budget.

The county had failed to spend any cash from the budget after former Governor Mike Sonko went to court to block its implementation while also refusing to sign warrants to enable the controller of budget to authorize release of the funds.

The county last month entered into a conditional arrangement with concerned parties to allow utilization of some funds to keep operations at the county going.

Indeed a good number of suppliers including publishing companies admit to having been paid by the County with CPF among other companies keen to benefit from recent developments across most counties including recent change of guard at the Council of Governors that has seen Embu Governor Martin Wambora replace Kakamega Governor Wycliffe Oparanya as the Council Chairperson.

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