Kisumu: The Local Authorities Provident Fund (LAPFUND) has launched an ambitious five-year strategic plan aimed at expanding the retirement benefits scheme fund value to Sh116.8 billion. The strategic plan (2024-2029), launched on Monday in Kisumu, seeks to onboard an additional 250,000 contributors and enhance collections by pursuing billions in outstanding remittances from county governments and water service providers.
According to Kenya News Agency, LAPFUND Chief Executive Officer Bernard Mbogo stated that the scheme is owed Sh27.83 billion by various county governments and water utilities, funds that are crucial for sustaining timely payments to retirees. He highlighted that counties continue to deduct pension contributions from employees but fail to remit them to LAPFUND, creating a challenging situation as retirees await their dues while the scheme is owed billions.
To address the issue of collections, Mbogo mentioned that the fund is engaging with the informal sector through tailored campaigns aimed at encouraging voluntary membership and contributions. He noted that this drive is expected to boost LAPFUND's contributions from the current Sh45 billion to Sh64.2 billion by the end of the strategic period, positioning the institution among the leading retirement schemes in the country.
Mbogo further explained that the fund plans to increase investments by 11.55 percent through diversification into real estate, private equities, and other high-yield assets to maximize returns and enhance the sustainability of the fund. Additionally, LAPFUND is investing in automation and human capital development to improve operational efficiency, with an anticipation of disbursing Sh39.2 billion in benefits to retirees over the five-year period.
LAPFUND Board Chairman Johnson Osoi indicated that the strategic plan aligns with the Sustainable Development Goals and supports the government's broader agenda of enhancing retirement savings. He emphasized good governance, transparency, rule of law, and prudent financial management as key pillars to elevate the scheme. Osoi identified non-remittance of deductions by counties as the scheme's biggest challenge and noted that the board intends to engage the Council of Governors (CoG) to formulate a structured debt recovery framework.
Kisumu Deputy Governor Dr. Mathews Owili, who officiated the event, praised LAPFUND for its prudent management of members' funds and expressed confidence that the new plan would drive significant growth. Dr. Owili pointed out that delayed remittances often result from erratic disbursements from the National Treasury, forcing counties to prioritize net salary payments and leaving statutory deductions pending.
LAPFUND is a defined contribution scheme regulated by the Retirement Benefits Act of 1997 and caters to employees of county governments and water companies. Members contribute 12 percent while sponsors contribute 15 percent of the member's gross salary. Currently, LAPFUND has a membership of over 78,000 spread across county governments and water and sewerage companies, with a fund value of over Sh66 billion in assets as of June 30, 2024.