TUK in trouble over Sh800 million pension deduction delay
The Senate Labour and Social Welfare Committee has accused the university of going against the law by not honouring staff deductions.
The Senate has raised concerns over the Technical University of Kenya’s failure to remit over Sh800 million in pension contributions, a situation that has persisted for years and now threatens the retirement benefits of university staff.
The Senate Labour and Social Welfare Committee has accused the university of going against the law by not honouring staff deductions.
During a committee session, Retirement Benefits Authority (RBA) CEO Charles Machira said the authority had no choice but to move to court after years of inaction and failure by the university to fix the pension issue.
He told the Senate that the pension scheme was no longer sustainable without the withheld contributions and that the RBA had taken steps to dissolve it.
"The liquidator now has a legal duty to collect the contribution arrears from the scheme's sponsor (TUK) and pay the outstanding benefits to the scheme's members," Machira said.
Machira explained that between July 2000 and June 2013, the contribution rates were 7.5 percent for employees and 15 percent for the employer.
These were expected to rise to 10 percent and 20 percent from July 2013, but TUK continued paying the older rates, resulting in arrears that kept growing every month.
TUK Vice-Chancellor Prof Benedict M. Mutua told the committee that the university’s hands are tied due to low funding from the National Treasury.
He said the institution’s current capitation is just Sh90 million, while they need about Sh240 million monthly to meet their financial obligations.
As a result, TUK has been unable to remit statutory deductions.
"We are not able to remit statutory deductions. We are only paying net salaries to our staff. This is because we require Sh240 million. We are now spending Sh150 million, yet the National Treasury only gives us Sh90 million as capitation. We cannot because we have inadequate funds," said Prof Mutua.
The committee is now expected to pursue further action to ensure affected staff receive their due benefits.