The County Assemblies Pensions Scheme Bill, 2024
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Mandatory 7.5% Member and 15% Sponsor Contribution Rates
The Bill sets clear funding requirements for the retirement scheme under Section 24:
- Members must contribute at least 7.5% of their pensionable emoluments.
- Sponsors (County Assembly Service Boards) must contribute at least 15% of the member's pensionable emoluments.
- Sponsors are also required to take out and maintain a life insurance policy with disability benefits valued at a minimum of three times the member's annual pensionable emoluments.
Up to KSh 5 Million Fine for Asset Misappropriation
To secure the fund, Section 48 introduces strict criminal liabilities:
- Any Trustee or employee who wilfully misappropriates Scheme assets commits an offence and is liable to a fine not exceeding KSh 5 million, imprisonment for up to five years, or both.
- Convicted individuals must also refund the Scheme three times the value of any loss incurred due to the offence.
Strict Remittance Deadlines and 3% Compound Interest Penalties
To prevent delayed pension remittances, Section 24 and Section 49 establish strict timelines:
- Contributions must be remitted by the sponsor before the tenth day of every calendar month.
- Unpaid contributions attract interest at a rate specified by the Board, which shall not be less than the market rate.
- If a sponsor fails to remit deducted contributions within 15 days, the Scheme can initiate recovery proceedings. Sums recovered through court proceedings attract a compound interest rate of 3% per month.
Six-Month Transition and Asset Transfer Window
Under Section 53, a transitional framework is established to consolidate old pension regimes:
- Members and staff of county assemblies under the Local Authorities Provident Fund and the Laptrust (Umbrella) Retirement Fund must transition into the new Scheme within six months.
- All funds, assets, property, and records held by these existing funds on behalf of county assembly members will automatically vest in the new Scheme.
Bill No.
Senate Bills No. 14 of 2024
Gazette No.
Supplement No. 56
Sponsor
AARON CHERUIYOT
Background
The County Assemblies Pensions Scheme Bill, 2024, seeks to address the lack of a unified, secure retirement scheme tailored for the political and administrative staff of Kenya's 47 county assemblies. Prior to this, members and staff of county assemblies saved through various legacy local authority schemes like the Local Authorities Provident Fund and Laptrust. This Bill establishes a single, regulated, defined-contribution pension scheme to protect and manage retirement savings under the oversight of the Retirement Benefits Authority (RBA).
Key Provisions
- Establishment of the Scheme: Section 4 establishes the County Assemblies Pension Scheme as a body corporate. The Scheme will offer defined benefits including periodic payments (annuites), lump-sum commutations, and income drawdowns.
- The Board of Trustees: Under Section 6, the management of the Scheme is vested in a Board of Trustees. The Board will consist of a chairperson, a county executive committee member for finance nominated by the Council of Governors, two representatives from County Assembly Service Boards, five county assembly representatives, two staff representatives, and a non-voting Chief Executive Officer (CEO).
- Trustee Qualifications: Section 7 requires Trustees to hold a university degree and possess at least five years of experience in finance, law, economics, actuarial science, or other related fields.
New Obligations
- Member & Sponsor Contributions: Section 24 mandates members to contribute at least 7.5% of their basic salary, while sponsors must contribute 15%.
- Monthly Remittance: Deductions must be remitted to the custodian by the tenth day of each calendar month. Delayed payments will automatically attract penalty interest.
- Solvency Guarantee: Under Section 54, county governments must guarantee the solvency of the Scheme in the short and medium term.
- Administrative Expenses Capped: Section 38 limits annual administrative expenses to a maximum of 1.5% of the total Fund value.
Penalties
- Asset Misappropriation: Trustees or staff members who steal or misappropriate Scheme assets face a fine of up to KSh 5 million, up to 5 years in prison, and must repay three times the stolen amount (Section 48).
- Non-compliance by Corporates: Where a corporate body commits an offence, every director, general manager, and secretary is deemed to have committed the offence (Section 48(2)).
- Refusal to Remit: Employers who fail to comply with deduction recovery notices face criminal prosecution, resulting in a fine of up to KSh 5 million, imprisonment for up to two years, and an additional daily fine of KSh 1,000 for continuing offences (Section 49).
- General Contraventions: Any other contravention of the Act where no specific penalty is defined attracts a fine of up to KSh 100,000, imprisonment for up to one year, or both (Section 50).
Transitional Provisions
- Transfer of Assets and Records: All funds, assets, rights, liabilities, and records currently held by legacy local authority schemes (Local Authorities Provident Fund and Laptrust) for county assembly staff must be transferred directly to the new Scheme administrator within six months of the commencement date (Section 53).
- NSSF Exemption: Under Section 52, sponsors and members of the Scheme may be exempted from making Tier II contributions to the National Social Security Fund (NSSF).
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