Revealed: Treasury rejected Sh100,000 pension for ex-MPs - Beaking Kenya News

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Thursday, 6 August 2020

Revealed: Treasury rejected Sh100,000 pension for ex-MPs

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The National Treasury warned that increasing retired MPs' pension to Sh100,000 would not be sustainable for the country’s already strained budget.

The former lawmakers are now at the mercy of President Uhuru Kenyatta after the Bill sailed through the National Assembly on Wednesday.

Former Leader of Majority Aden Duale fired the first warning shot that the House could be legislating the Bill in vain considering the Treasury’s adverse opinion.

He argued that by the advisory, and from his experience, the Bill has a high likelihood of flopping at the assent stage.

“Once the vellum has been prepared, consultation takes place between the Attorney General and the concerned ministry.

“If at this stage they are given an adverse opinion there is a high likelihood that they will give a more adverse opinion to the President when it comes to signing of this Bill,” the Garissa Township MP said.

The legislation sponsored by Minority Leader John Mbadi will award pension payout to members who served between 1984 and 2001.

However, the bid to give the former MPs – said to be living in squalor - a lifeline may hit the headwinds should President Kenyatta heed Treasury’s call.

Treasury says there would be no basis for increasing the pension to Sh100,000 as payment of benefits is based on salary.

It also warned that backdating the payments would amount to rewarding oneself for service not rendered.

Principal Secretary Julius Muia, in a memorandum to the House, said that granting the increase pay would stretch the government’s pension contribution.

Treasury argued that any recovery from the proposal would attract 15 per cent interest "resulting in a large sum of money that may take many years to pay."

The basis, Muia said, is that retired MPs are no longer earning a salary as required under the Act and therefore may not contribute to the scheme.

Treasury said that since the Parliamentary Pension Scheme is contributory, a review of benefits would require both sitting and retired MPs to pay at a higher rate.

Current MPs will earn about Sh127,800 monthly pension after earning a lump sum of Sh7.7 million – based on Sh426,000 pensionable emoluments.

Muia further raised concerns there would be pressure from retired MPs - earning higher pensions - to be considered for a similar increase, for equity.

Treasury warned that the same would apply to current MPs once they retire, hence the amendments would set a bad precedent.

It held that other categories of public servants would be motivated to also seek for review of their pension in tandem with the proposed amendments.

“This would lead to a huge increase in the public pensions wage bill thereby negating the efforts by the government to tame the rising public wage bill,” Muia said.

While rejecting pensions for single-term lawmakers, Treasury further reasoned that increments are captured under the Pensions Increase Act which provides for increase of three per cent or Sh500 every two years.

It expressed fears the amendment would cause a higher ripple effect on the budget “since other public retirees will agitate for inclusion, including litigation for equal treatment.”

Treasury says the Council of Governors already wants pension benefits under the scheme for retired deputy presidents and other designated officers.

The Senate had also recommended that former councillors be paid Sh1.5 million one-off and a monthly pension of Sh30,000.

The Kenya Association of Retired Officers is agitating for a review of pension benefits for all retired civil servants, Treasury revealed.

Mbadi urged the President to assent to the Bill having dropped the initial plan of backdating the payments to 2010.

If this was to be the case, Treasury was to set aside Sh1.15 billion to cater for the arrears and Sh136.2 million every year for monthly pension.

The Suba South MP said the Sh136 million would not strain the Exchequer considering the plight of the former MPs.

“We agreed that we can shelve the arrears but allow these MPs to benefit. The assertion that widows will benefit does not apply,” the MP said.

Majority Leader Amos Kimunya said it was wrong to second-guess the President’s actions by insinuating he’d reject the Bill.

“This is close to discussing the President in this House. Let us cross the bridge when we get there. If there is anyone to give that feedback, it would be me.

“Let us be fair to the members who served in this Parliament. We are not giving them a pension but giving them money at present value,” the Kipipiri MP said.

Minority Whip Junet Mohammed said the Treasury advisory does not stop MPs from legislating the Bill.

“The element of Treasury is simply advisory. This is one Bill we must support by all means. I urge the President to assent to it,” the Suna East MP said.

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