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Economy

Former legislators lose Sh6.7 million end of term payout

President Kenyatta is required by law to appoint a date for the first sitting of the 12th Parliament. FILE PHOTO | NMG
President Kenyatta is required by law to appoint a date for the first sitting of the 12th Parliament. FILE PHOTO | NMG 

MPs who were defeated in this year’s General Election have lost the right to get a Sh6.7 million end of term payout after the Parliamentary Service Commission (PSC) ruled that they cannot earn both a gratuity and lifelong pension.

PSC says that 196 one-term MPs who lost seats in the August 8 poll will choose between the Sh6.7 million gratuity and a refund of their pension contributions made over the 52 months they were in the House.

The lawmakers are expected to go for the refund of their pension equivalent to the amount contributed at an annual interest of 15 per cent for every year served than the gratuity because the contributions are expected to cross the Sh10 million mark.

The 79 MPs who failed to secure back their seats and had served for two terms will be offered a lifelong pension of Sh125, 000 per month and miss on the gratuity.

The Treasury had set aside Sh2.8 billion as gratuity cash guaranteeing each MP Sh6.7 million at the end of their term.

Paid gratuity

“If a member has served only one term, he or she can choose to be paid gratuity or a refund of his contributions,” National Assembly Clerk and administrator of the pension scheme Michael Sialai told the Business Daily in a recent interview.

He added that those who served two terms before losing their seats do not qualify to earn gratuity. But some members of the 10th Parliament, whose term ended in early 2013, managed to walk away with both pension and the gratuity cash — which was previously offered to all MPs who failed to secure their seats.

The Salaries and Remuneration Commission recently ruled that the two retirement packages cannot be offered together to State officers and public servants.

Legal lacunae

The pensions department said a legal lacunae saw members of the Ninth and Tenth Parliaments get paid both pension and gratuity — a position that is not sustainable in law.

MPs contribute 12.75 per cent of their salaries for pension, while the government contributes a similar amount.

The term of the 11th Parliament drew to a close on August 7, paving the way for the election of the 12th Parliament on August 8, 2017.

The one-off compensation was one of the key items that remained unresolved after the legislators forced the SRC to give them a fresh pay package with no ceilings on allowances.

The SRC in July gazetted a new pay structure for MPs, cutting salaries to Sh621,000 down from 710,000, which will run from 2017 to 2022.

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