Raila's Sister and the Kenya Railways Staff Retirement Benefits Scheme

Welcome to the Kenya Railway's Pensioners blog. Every thought is valued and each expression respected.

There comes a time when People act in a mob like manner and take decisions by means of what they feel rather than on the basis of Facts. This situation visited the Kenya Railways Staff Retirement Benefits Scheme in 2008  and again it happened in October 2011to the great disadvantage of all stake holders. It begun with the Sponsor's appointment of new Trustees just at a time when the founder Members of the Board of Trustees had developed a strategic plan and were at a point of implimenting the policy. A new set of Trustees were then appointed including the imediate former Chair person Ms Beryl L. Odinga.

Unfortunately, her family name got in the way of every action and perception of her administration to the extent that very few people could see anything else other than that she was the Prime Minister's sister. In few occations this opened doors that would generally not open to a struggling pension Scheme. But most of all it attracted all those who wanted to take a pot shot at the Prime Minister but did not have the courage or basis for the attack. Thus when she eventually left the service of the Scheme in a huff with alot of attack on her admininstration by Stake holders in the industry as well as the press I wonder whether any one has spent time to ask themselves the question. "If any rational being was given the same circumstances that operated at the Scheme what would they do?" Personal flaws aside what really went wrong? what alternative means need to be taken?

Here are some of the circumstances:-

1. The Scheme was established in 2006 by an insolvent Sponsor (Kenya Railways Corporation) whose only asset to transfer was property valued at Kshs 12.4 Billion no money was transferred with those assets. No follow up funds would be recieved except relactant payment of rent.
2. The sponsor was at the same time terminating the services of all its staff whom at the time of the Concession were 8500 permanent and 7500 casual employes. Of this group 3600 were being absorbed by Rift Valley Railways and KRC would retain less than 200 on new contracts of employment. Along with this group was another 7500 pensioners who were already retired.in a nut shell a large number of angry and agrieved group awaiting to be settled.
3. The properties transferred had 14 out of 23 titles availiable yet they needed to be trasferred from East African Railways the preceding organisation to Kenya Railways. Other titles were yet to be surveyed  or were charged with Banks prior to transfer. The property was also encumberred by occupants some with legal disputes with the Kenya Railways on their former terms of employment. Others still developing a squarter tendancy assisted by local ward leadership who consider them their consituents.
4. On month one the Scheme was required to pay Kshs28 million in pensions. this amount has risen to Kshs 55 million as at December 2011. there was an arrears of pensions increase dating back to 1997 which was due at an increase of 3% per annum.
5. The properties had liabilities owed to the City in form of Rates and Land rent owed to Mininstry of Lands amounting to over 200 million.

Among other minor challenges, it is amazing that the Scheme even took off. The only item that sustained it has been good will from the various stake holders as the Trustees grapled with the payment of pensions as they rationalised the assets to a more economically viable state. As at December 2011,

1.  the scheme has paid over Kshs 2 billion in pensions  
2. Transferred all the assets to the Scheme except 2 titles
3. The assets is now worth over Kshs25 billion
4. Established Systems that manage the fund and respond to challenges on its governance and other threats
5. Is a stable going concern if the liquidity position is improved.

Against these actions is the the report of examination by the Regulator which highlight the human element where self preservation took centre stage. The next course of action would be to implement the recommendations. I hope that whoever does this should learn from the past situation and ask the Question is a Pension Scheme a Public Entity or Not because thats where alot of the current concerns are emanating. What latitude do Trustees have and of course what is the security of tenure for the Service providers that provide advise?

So I leave it for you to Judge but remember that the main concern is about the Pensioners many of whom are old and depend on the Kshs 2000 to purchase medicine. they cannot afford to wait for experiments.