Economy

Pensioners made to wait longer for Sh5bn on Covid setbacks

retire

Retired civil servants, teachers, police and military personnel were paid Sh26.19 billion in benefits during the first quarter of the current financial year ending June 2021. FILE PHOTO | NMG

BDgeneric_logo

Summary

  • Director of Pensions at the Treasury Michael Kagika said measures which required staff aged above 58 and those with underlying ailments to work from home slowed processing of claims.
  • Treasury secretary Ukur Yatani had in June pledged to clear the backlog by December, paving the way for transition to a new contributory pension scheme from January 2021.

Pension payouts to retired civil servants and State officers missed the target by Sh5.15 billion in three months through September in what the Treasury attributes to Covid-19 containment measures such as working from home.

Retired civil servants, teachers, police and military personnel were paid Sh26.19 billion in benefits during the first quarter of the current financial year ending June 2021, a shortfall of 16.44 percent against Sh31.34 billion goal.

Director of Pensions at the Treasury Michael Kagika said measures which required staff aged above 58 and those with underlying ailments to work from home slowed processing of claims which were 0.27 percent lower compared with Sh26.26 billion in corresponding quarter a year ago.

“Our processing of claims was lower than expected performance, more so in the month of July and early August. By that time, we were still trying to see how do we have all the sections working in shifts and still ensure work flows seamlessly,” Mr Kagika said.

“We are, however, catching up and whatever that we were not able to process in the first quarter, we shall make up in subsequent quarters, and by close of the financial we shall have regained what we lost. We do not want retirees to wait for unnecessarily long time before they can access their pension.”

The Treasury has budgeted for Sh119.19 billion towards retirees benefits this financial year ending June 2021, cash which is nearly three-and-a-half-fold more than Sh27.71 billion seven years earlier.

Treasury secretary Ukur Yatani had in June pledged to clear the backlog by December, paving the way for transition to a new contributory pension scheme from January 2021.

Civil servants, unlike workers in the private sector, have not been contributing to their pension, with the benefits paid straight from taxes.

The rollout of the contributory retirement plan, after a delay of more than eight years since the Public Service Superannuation Scheme (PSSS) Act became law, is expected to ease pressure on taxpayers.

"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.