A majority of retirement benefits and social schemes in the country do not have functioning conflict resolution policies set to handle disputes arising as a result of the management of funds.
In a survey conducted and released by Strathmore Business School in Nairobi, a lack of such mitigating policies has resulted in conflicts relating to processing and expenses, trustees’ appointment, among others.
During a virtual webinar conducted by financial advisor, Enwealth Kenya, it’s country General Manager George Oyugi said schemes should embrace early prevention and alternative dispute resolution mechanisms in solving the conflicts arising during such processes.
“Courts ought to be the last resort even though Schemes should embrace alternative resolution mechanisms because it’s not time-consuming and saves relationships from straining further,” he said.
Naomi Mwangi a lecturer at Strathmore Business School, which conducted the survey, established that only 26 percent of schemes have a conflict resolution policy while 37 percent do not have any in place while a similar percentage in their response said they don’t know if they have.
On who has the ultimate responsibility of managing the conflicts in pension funds, trustees play the greatest role, followed by the Retirements Benefits Authority and human resource managers. “To improve the conflicts management, the survey recommends among others, increased effective training of the members at 27.5 percent, followed by improved governance of pension schemes and communication between different partners within the industry both at 16.7 percent,” said Ms. Mwangi.
According to the Retirement Benefits Authority, the Nomination and Election of Trustees and Non-remittance of contributions have been pointed as some of the key triggers that lead to the arising of conflicts. This is common among companies that have been or are facing financial issues which may in turn impact negatively their finances.
Ann Mugo, Chief Manager on Market Conduct, RBA Kenya continued to say the appointment of trustees more so those accused of graft, investment losses largely attributed to negligence but often due to market and also a revision of scheme rules have largely been identified as triggers to conflicts.