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Economy

State in fresh pension scheme rollout pledge

Service secretary Sicily Kariuki and Union of Kenya Civil Servants secretary-general Tom Odege sign a document. FILE PHOTO | NMG
Service secretary Sicily Kariuki and Union of Kenya Civil Servants secretary-general Tom Odege sign a document. FILE PHOTO | NMG 

The Public Service ministry has said it will roll out the contributory pension scheme for government workers this year, a plan that has been in the offing since 2012.

Public Service secretary Sicily Kariuki said the ministry was working to have the scheme in place by the end of the year.

“This year the National Treasury has indicated willingness to implement it. We need the scheme as early as today so that we start planning,” said Mrs Kariuki during the signing of a collective bargaining agreement (CBA) with civil servants union on Tuesday, a deal that will cost taxpayers Sh20 billion.

The Union of Civil Servants of Kenya Secretary- General Tom Odege said the contributory scheme was long overdue and blamed the government for the delay.

“We met and agreed on the structure,” said Mr Odege.

The delay has been due to difference on how to roll out the scheme in which the government wants to manage it but the union has insisted that it must be run by a board of trustees.

“The scheme must have a board of trustees with separate account. We will appoint seven members on the board,” said Mr Odege adding that the scheme if rolled out will benefit more than 400,000 members including teachers.

The scheme in 2012 had indicated that civil servants were to contribute two per cent of their salaries to the retirement scheme in the first year, five per cent in the second and 7.5 per cent from the third year onwards.

The government, as the employer, was to match every worker’s monthly contribution with another 15 per cent of his or her salary and the government was also take out and maintain a life insurance policy worth a minimum of five times the member’s annual pensionable emoluments.

The retirement age for civil servants rose to 60 years from 55 years in 2009 as the government sought to re-organise its finances.

It is estimated that about 20,000 civil servants retire each year.

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