Economy

Government retirees from critical areas to be rehired in Bill

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Parliament buildings in Nairobi. FILE PHOTO | NMG

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Summary

  • Thousands of public servants were expected to exit last year, adding to the more than 60,000 who retired in the three years through June 2020.
  • Some 20,300 public servants were earlier projected to have retired in the year ended June 2020, up from 19,800 a year earlier and 19,300 in the financial year 2017/18.
  • The Treasury allocated the pension department Sh153.64 billion in the current financial year to honour monthly pensions claims and gratuity pay by senior citizens.

Civil servants in critical areas such as health, security and education will be tapped back to work on a post-retirement employment programme, if MPs approve a new Bill.

The Geriatric Bill, 2021 also seeks to pave the way for the hiring of retirees on scaled hours to work in any other area as may be determined by the Public Service Cabinet Secretary.

“The Cabinet Secretary (Public Service) shall in consultation with the National Council for Older Members of Society, State agencies and the Salaries and Remuneration Commission make regulation for voluntary or non-voluntary post-retirement employment of older members of society, on scaled hours, in the following critical areas-health, national security, education and any other service areas as may be determined by the Cabinet Secretary,” the Bill states.

If the Bill is enacted into law, individuals who have attained the mandatory retirement age of 60 years will be handed an opportunity to earn a monthly salary for the duration of the new employment terms.

The Bill sponsored by Kiambu Woman Representative Gathoni Wamuchomba seeks to improve the living conditions of older members of the society by fulfilling their rights to human dignity, safety, security, education, health, equality and non-discrimination. 

“The principal object of this Bill is to give effect to Article 57 of the Constitution by establishing a legal framework for the treatment of older members of society,” Ms Wamuchomba said.

The Public Service has been grappling with an ageing workforce following a hiring freeze to contain a ballooning wage bill.

The problem was compounded by the government’s decision to change the retirement age from 55 to 60 years in 2009. 

The ballooning wage bill has squeezed funds for development, forcing the State to go for loans to finance development projects and pay salaries.

The Treasury projects that spending on salaries and allowances will rise to Sh550.7 billion in the year to June 2023.

Enacting the Geriatric Bill into law is likely to have an impact on the pension and gratuity payment bill, which has been on the rise over the past eight years on the back of an ever-increasing number of retirees from the public service.

Thousands of public servants were expected to exit last year, adding to the more than 60,000 who retired in the three years through June 2020.

Some 20,300 public servants were earlier projected to have retired in the year ended June 2020, up from 19,800 a year earlier and 19,300 in the financial year 2017/18.

The Treasury allocated the pension department Sh153.64 billion in the current financial year to honour monthly pensions claims and gratuity pay by senior citizens.

The Treasury paid out Sh69.22 billion in pension and gratuity in the six months to December 2021. 

The pension bill pressure is partly blamed on delays by the Treasury to enforce various reforms, including a contributory pension scheme.

This has seen pension claims, paid directly from the exchequer, surge from Sh27.1 billion eight years ago to Sh153.24 billion in the current fiscal year, according to statistics published by the Treasury.

The Treasury only implemented the contributory Public Service Superannuation Scheme in January 2021, nearly nine years after the law — Public Service Superannuation Scheme (PSSS) Act— was enforced.

Public servants below the age of 45 are being deducted two percent of their gross pay towards pension savings this year, which will rise to five percent next year and 7.5 percent in 2023. This is optional to those aged 45 and above.

The government, which matches every worker’s monthly contribution with 15 percent of the salary, has allocated Sh20.8 billion to the scheme in the next fiscal year from Sh7.3 billion in the current budget.