CPF Financial Services, a county pension fund administrator, is considering selling assets of some devolved units among them Nairobi County to recover a huge debt in form of unremitted members contributions.
CPF says the local authorities pension trust Laptrust scheme, with almost 8,000 members, is struggling with outstanding unremitted contributions by the counties, leading to lower returns for pensioners from invested assets.
The Retirement Benefits Authority has been engaged by the top debtor, Nairobi City County, to recover the defaulted funds.
It managed to get rid of high arrears due to the collection of debt by Nairobi Water and Sewerage Company.
The audit of the assets and liabilities of the former municipalities and county councils was completed and the debt owed to the scheme was captured. The Laptrust DB scheme chairperson Winfred Mbai said that considerations are being made to explore ways of liquidating the debt.
The Board has engaged inter-governmental agencies on possible recovery of debt at source. This will be the only way to make sure that funds are quickly recovered and invested for the members benefit. Most of the unremitted contributions are historical before the establishment of devolved units. The scheme has had to collect contributions from all sponsors in full to control the buildup of debt because of this.
The assets under management of CPF Financial Services were 68.24 billion as of December 2021, under four managed schemes with over 87,700 members.
The schemes managed by CPF include Laptrust, the County Pension Fund, the CPF CPF Individual Pension Scheme and the Salih, a segregated fund within the CPF.
The fund value of Laptrust Defined Benefits increased by 1.6 percent to Sh 31.8 billion, from Sh 31.3 billion the previous year.
The active members of the Laptrust scheme stood at 17,109 a decrease from 18,014, with the increase to 7,894 from 7,723, the pensioners and beneficiaries increased to 7,894 from 7,723.
The country's retirement benefits assets under management increased by 4.68 percent to 1.55 trillion in December 2021 from 1.48 trillion in June 2021, with 45.7 percent invested in government securities.