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TelPosta Pension Scheme forced to sell 64 properties to resolve illegal asset mix
Real estate has been among the top attractive holdings for many legacy pension schemes, especially those that inherited land and housing stock during State restructuring phases in the 1990s.
The TelPosta Pension Scheme has activated a nationwide disposal of 64 houses and plots of land in a bid to correct a massive breach of investment limits that has left the fund overexposed to real estate.
The scheme is selling 16 flats, 14 vacant plots and 34 bungalows spread across Nairobi, Naivasha, Nyeri, Nanyuki, Kericho, Karatina, Isiolo and other towns, in one of the biggest single pension property disposals seen in recent years.
The current real estate exposure currently stands at 82 percent of its total asset base, which is nearly three times above the legally set limit of 30 percent.
Trustees of the scheme said the sale of the properties is necessary to restore compliance and free up liquidity to settle benefits for pensioners who were members of the old State-owned telecoms and postal sector before the liberalisation era changes at the turn of the millennium.
The firms included the defunct Kenya Posts & Telecommunications Corporation, Telkom Kenya Limited, Postal Corporation of Kenya and the Communications Commission of Kenya (now Communications Authority of Kenya).
The pension scheme inherited most of the assets more than two decades ago during the government’s restructuring of the postal and telecommunications sector.
“In November 1999, the government vested in TelPosta Pension Scheme trustees various properties for purposes of discharging pension liabilities in respect of any person who on June 30, 1999, was entitled to receipt of a pension,” wrote the trustees in a public notice.
As the cash demands on the scheme grew, especially from retirees whose pension rights stretch back to the late 1990s transition period, the mismatch between physical assets and liquid income-generating assets appears to have reached a breaking point.
“The scheme’s property portfolio currently stands at 82 percent, which is above the 30 percent limit set by law. The board of trustees sought and received concurrence to dispose of the properties to ensure compliance,” added the trustees.
The properties have now been formally placed on tender, with bids closing on December 1 this year.
Real estate has been among the top attractive holdings for many legacy pension schemes, especially those that inherited land and housing stock during State restructuring phases in the 1990s.
This has, however, created liquidity hitches for funds that require cash to meet pension payment obligations.
