Members of the Kenya Broadcasting Corporation’s (KBC) staff retirement scheme are demanding Sh18 billion from the state broadcaster, a move that is likely to exacerbate the corporation’s financial woes.
The employees are owed Sh18,421,704,159, according to computations filed in court by the Board of Trustees KBC Staff Retirement Benefits Scheme.
According to court documents, the national broadcaster has been deducting monthly contributions but failing to remit them as required by the Retirement Benefits Act.
According to documents filed by the board’s lawyer Morara Omoke, the withheld funds are from pension contributions and rental income (rent collections) from 2011 to date. According to the lawyer, the non-remittance caused the scheme’s funding level to deteriorate, exposing it to massive risks.
Mr Omoke submitted the computations in response to an order issued by Labour Relations Court judge Maureen Onyango in April 2022.
The judge also ordered the national broadcaster to pay 3% compound interest per month beginning on the date the suit was filed in 2018.
Lawyer Omoke won yesterday after the judge thwarted the Retirement Scheme’s Board of Trustees’ intention to drop him from the suit and replace him with the law firm of Gichamba & Company Advocates. The latter had filed a notice of change of counsel, which the court dismissed.
The court determined that the attempts were made illegally and without due process. Mr Omoke argued that the board wanted to use the new law firm to file fresh computations discounting the claim of Sh18 billion owed to the KBC Pension Scheme without the consent of all scheme members.
“The computations as at the date of the judgment amount to Sh18,421,704,159, but the trustees of the KBC Staff Retirement Benefits Scheme are suggesting a sum of Sh6,369,152,342, which is a reduction of approximately 65.4 per cent,” Mr Omoke said.
He claimed that reducing the claim was illegal, and that the computations proposed by the trustees were not in accordance with the court’s orders in the April 27 judgment.
Furthermore, the proposed computations violate Section 53 of the Retirement Benefits Act.
The national broadcaster has struggled to pay its bills, according to a year-end report by Auditor General Nancy Gathungu, highlighting the company’s deepening cash flow crisis and signaling economic pain for its employees.
“The corporation is exposed to the risk of incurring penalties and interest with the continued delay in remittance of the deductions,” the report says.
According to the lawyer, the low funding level exposed the scheme to massive risks as a result of KBC’s failure to remit employees’ contributions alongside its own.
Mr Omoke stated that non-remittance had also exposed the scheme to regulatory scrutiny by the Retirement Benefits Authority (RBA), including the threat of closure.
He stated that there was concern that KBC employees, who were members of the Scheme, would retire in poverty because the employer was not fulfilling its obligations. Employers are required to remit statutory and member deductions to pension schemes, Saccos, and banks.
“At least 70 per cent of KBC employees are aged over 48 years and are living in fear of retirement given that they will neither receive pension lump sum nor be eligible for pension income because of the financial damage directly caused by the State broadcaster,” said the trustees in court.
According to the lawyer, the low funding level exposed the pension scheme to massive risks as a result of KBC’s failure to remit employees’ contributions alongside its own.
To adopt the computations, the case will be mentioned on October 31, 2022.
