Pension payouts hit Sh13bn in two months

Expenditure on pension payouts to retired civil servants in the first two months of the current financial year more than doubled as the Treasury raced to clear backlog by December.

Exchequer data released by National Treasury Cabinet Secretary Ukur Yatani shows that taxpayers spent Sh13.16 billion on pension and gratuities pay in July and August, a 108.36 percent jump compared with the same period last year.

Payment of the retirement benefits in the financial year ended June fell short of the targeted Sh104.49 billion by Sh17.50 billion due to what Mr Yatani in February blamed on “slower than targeted processing” of the dues.

The CS has, nonetheless, pledged to clear the backlog by end of the year ahead of roll out of a contributory pension scheme for civil servants from January which is expected to ease pressure on taxpayers.

This financial year ending next June, the Treasury has budgeted Sh119.19 billion towards retirees benefits, cash which is nearly three-and-a half-fold more than Sh27.71 billion seven years earlier.

The pension pressure has continued to pile on taxpayers despite a knee-jerk decision in 2009 to raise the retirement age from 55 to 60, partly due to Treasury’s failure to push through necessary reforms, including a contributory scheme.

"The National Treasury is re-engineering and upgrading the pensions system in order to clear all pension payment backlog by the end of the calendar year,” Mr Yatani said on June 11.

“This will pave way for a modernised pension management system that will guarantee smooth transition of retirees from a monthly salary cheque to a monthly pension payment."