The pension burden is expected to hit Sh40 billion by the end of this financial year. File
What you need to know:
A consultant is to be hired by the next financial year to cleanse the pensions payroll.
By the end of this financial year, pension records are supposed to be updated, then digitised.
The Pensions Department is supposed to be fully automated by 2018, with an operation Pension Management Information System (PMIS).
The Treasury is targeting thousands of ghost pensioners in a clean-up effort aimed at stemming a rapid rise in the government’s annual retirement bill.
Expenditure on State pensioners has risen by Sh15 billion in just three years, at a time the government has put a freeze on civil servants retirement.
The pensions department is expected to spend Sh200 million to weed out the pensioners’ payroll, according to a new Treasury strategy document seen by the Business Daily.
“There is need to integrate the payroll and pension management systems to improve personnel records and minimise irregular claims,” says the Strategy for Public Finance Management Reforms in Kenya 2013-2018 paper signed by Finance minister Njeru Githae and his permanent secretary Joseph Kinyua.
In the financial year 2010/11, the pension burden stood at Sh25 billion and is expected to hit Sh40 billion by the end of this financial year. This comes at a time when the government extended the retirement age for state employees to 60 years from 55.
The Treasury revealed in a newsletter that it processes an average of 24,000 pension claims every year. This would mean that out of the Sh34 billion to be paid out this financial year, each pensioner receives an average of Sh118,000 per month. In total there are slightly more than 200,000 pensioners.
Manipulating the data has been easy since the process has remained manual.
The fact that the Pensions Department nowadays takes an even shorter time to pay once a claim is made — 21 days currently from 45 in 2009 — could also have opened loopholes for the government to lose money.
This is at a time when the government least needs waste given the budget deficits and heavy debts incurred in the past two years.
A consultant is to be hired by the next financial year to cleanse the pensions payroll. By the end of this financial year, pension records are supposed to be updated, then digitised.
The Pensions Department is supposed to be fully automated by 2018, with an operation Pension Management Information System (PMIS).
The far-reaching reforms imply there may be personnel changes in the department, which currently has 180 workers. As the “ghost” files are removed from the system, the Pensions Department is then expected to reduce the number of days it takes to pay claims.
Eventually, by the fifth year or 2018, it should take only five days to pay for retirees’ claims as the payroll and pensions system would be integrated and able to identify retirees automatically.
Micheal Obonyo, the public relations officer in the Pensions Department, told the Business Daily that the number of ghost pensioners was not yet known.
The disproportionately high figure may indicate that the “ghost pensioners” may be the ones receiving high payments that raise the average payment.
The problem of “ghost” pensioners and the fact that the retirees were becoming a major drain on the exchequer could have contributed to the decision to move civil servants to a contributory pension scheme beginning July this year.
