The Application of Corporate Governance Principles to Occupational Retirement Benefit Schemes Sponsored by Public Entites:With Reference to National Museums of Kenya Staff Pension scheme

Abstract

This study is on corporate governance and how it has been applied in occupational retirement benefit schemes of public entities. To narrow down the broader issue of corporate governance, the study undertook to ascertain the application of corporate governance principles in occupational retirement benefit schemes sponsored by public entities such as state corporations, with a reference to National Museums of Kenya staff pension scheme. The study further considers the impact of corporate governance on independence from sponsor influence, performance, professionalism, relationships with service providers and relationships with the members and other key stakeholders as well as maintenance of the statutory scheme funding level. To achieve its objectives this study provides a background into the need for retirement benefits and its place in the provision of social security. Next the study looks at the challenges that defined contribution scheme sponsored by a public entity are facing including non-remittance of contribution and lack of effective mechanisms to ensure compliance of these schemes. Next, the research methodology is outlined with the use of the National Museums of Kenya staff pension scheme as a case study. The stakeholder theory and agency theory anchor this study with a focus on leadership linked with the duties and responsibility of the trustees to the members of the scheme. The study discusses the governance structure in retirement benefit schemes in Kenya using the case study and other similar jurisdictions with a view to consider any gaps and new strategies that could be incorporated in this jurisdiction. The study also considers the governance structure of the National Museums of Kenya staff pension scheme and the challenges it has experienced from formation of the trust in 2011 to the date of the study. Ultimately, it will aid in filling the corporate governance gaps that may exist in National Museums of Kenya staff pension scheme in its quest for maintained viability. The study recognizes that corporate governance challenges prevent the success of retirement benefit schemes and the realization of old age security as a pillar of social security and as provided in the Constitution of Kenya, 2010. Though established to secure an individual's retirement, the retirement benefit schemes of public entities suffer from severe funding v Research project GPR 699 C;62179959/20 12 challenges. The study ultimately recommends that the legal and regulatory framework should be complemented by a robust corporate governance framework, which needs to be actualized at the institutional scheme level for the scheme to thrive. Though the adoption of the principles of corporate governance is important in entrenching a good leadership, they are inadequate in themselves to guarantee delivery of retirement benefits as and when they fall due to members. In retirement benefit schemes of public entities especially. there must be a commitment from the government and the sponsor public entity to fund the schemes and provide pension for its employees. This commitment is even more necessary in schemes sponsored by public entities that solely rely on the national government for funding and are without external sources of revenue such as levies and fees.