Economy

SRC, governors fight over Sh2.3bn exit pay

Lyn Mengich

Salaries and Remuneration Commission (SRC) chairperson Lyn Mengich at a press briefing in Nairobi on October 7, 2021. PHOTO | FRANCIS NDERITU | NMG

The Salaries and Remuneration Commission (SRC) has opposed in court a bid by outgoing county governors and their deputies to pay themselves up to Sh2.3 billion annually in retirement perks.

The SRC, which advises the government on the wages of public sector officials, says the payout is not sustainable and is an additional burden to taxpayers.

Governors and their deputies are seeking a lifetime monthly pension of Sh739,200 and Sh700,000 respectively in line with the payouts offered to retired presidents, deputy presidents, chief justices and parliamentary speakers.

Besides the monthly pay, they are seeking a lump sum payment equivalent to their one-year pay, a 3,000cc four-wheel-drive car, fuel allowance, a driver, a personal assistant and a medical cover for local and overseas treatment.

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The SRC says the government will require Sh2.3 billion in the first year to cater to the juicy perks sought by governors and their deputies.

Presently, they are paid a gratuity that is equivalent to 31 percent of the basic pay earned in the period they serve or Sh10.3 million and Sh6.94 million respectively.

The Council of Governors (CoG)—the county chiefs’ lobby—filed a suit in June seeking the monthly pension, arguing that other State officers like the President and the Deputy President are entitled to a lifetime payment.

They cited discrimination, inequity and unfairness in the failure to offer them a regular monthly pension.

The SRC has opposed the perks for the county bosses, arguing they are costly and risk distorting the retirement pay structures of State officers.

State officers on fixed term like Cabinet secretaries and Principal secretaries are not entitled to a monthly pension, but MPs who have served for more than two terms get a lifetime monthly pay.

“Besides fiscal unsustainability, providing pension benefits as proposed by COG would distort the retirement structures for State officers and lead to disparity in retirement benefits between governors and other State officers,” Anne Gitau, the SRC’s chief executive officer, said.

The SRC says it agreed with the CoG in January 2020 to set up a pension scheme for State officers in the county governments, including governors and their deputies.

This followed the release of guidelines that came up with two types of benefits for State officers serving in counties—a contributory pension or gratuity.

“It is the respondent’s case that upon payment of gratuity, a State officer in the county government may also opt to join a personal pension plan by various financial institutions,” she said.

Governors earn a monthly gross pay of Sh924,000, setting their basic salary at Sh554,400 and putting their monthly pension at Sh443,520.

Deputy governors stand to get a monthly pension of Sh298,200.

This is based on their earlier push to get a monthly pension equivalent to 80 percent of their basic pay, akin to the model used to calculate a retired president’s perks.

The SRC says the proposal by CoG will leave the Treasury with a bill of Sh1.3 billion in the first year after accounting for other benefits.

A monthly pension for deputy governors will set back taxpayers Sh1.04 billion.

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The SRC has warned that the proposal would trigger similar demands from other State officers like the Attorney-General, Cabinet secretaries, holders of constitutional commission offices, judges and MPs.

They represent 18 percent of all State officers and would cost the taxpayer Sh17 billion, according to the SRC.

The CoG argues in the petition that they are being discriminated against because the Deputy President and designated State officers such as former vice-presidents do not contribute towards the scheme but enjoy pension with defined benefits.

The governors say they have made numerous requests to the SRC for the provision of pension benefits as required by Article 43(1)(e) of the Constitution.

“The recommendation made for governors to enjoy gratuity whilst their counterparts at the national level enjoy a pension with defined benefits occasions discrimination, inequity and unfairness,” Mary Mwiti, the chief executive of CoG, said in court documents.

The CoG reckons that other countries with devolved units such as Nigeria and South Africa provide pension for their governors.

Ms Mwiti said in Nigeria, the constitution provides the pension for governors and their deputies and is charged from the Consolidated Fund.

She added that governors, by virtue of having their terms limited to 10 years, cannot be equated to other State officers like MPs whose terms are not limited.

Governors are worried that, whereas they may resort to personal savings and investments in old age, there is a risk that their savings could be easily depleted, forcing them to fall into poverty.

The governors want the High Court to compel the SRC to grant them the pension benefits.

A retired president’s once-a-month pension is set at 80 percent of his pensionable salary, which is equivalent to 60 percent of Sh1.44 million monthly pay offered to the sitting president. This translates to a monthly pension of Sh666,700.

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A retired president also has other perks like fuel, house and entertainment allowances, which push the overall benefits above the salaries and allowances of top chief executives of State-owned firms like KenGen, Kenya-Re and Kenya Power.

The law also entitles them to two personal assistants, four secretaries, four messengers as well as four drivers and bodyguards, pushing the office and home workers to 34 under the scheme funded by taxpayers.

Retired presidents are also entitled to four cars, including two limousines, which are replaced every four years. They have full medical cover and a fully furnished office.

The lavish package has also come under heavy criticism on grounds that some of the retired State officers left office as rich men with property worth billions of shillings and vast business interests.

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