Treasury cuts pensions and gratuity cash by Sh42bn
National Treasury Cabinet Secretary Ukur Yatani addressing the media at parliament buildings after unveiling the Sh3.3 trillion Budget on April 7, 2022. PHOTO | JEFF ANGOTE | NMG
The expenditure on pensions and gratuities for the current financial year has been slashed to Sh111.14 billion from earlier estimates of Sh153.64 billion.
This came after Mr Yatani said payroll for the public service pension was growing fast and had crossed 300,000 pensioners and dependants last December.
The pension’s payroll has continued to surge in recent years on the back of a fast-ageing public service, piling pressure on taxpayers amid delays in implementing reforms in the past.
The Treasury has cut the budget for paying retired public servants by nearly Sh42.50 billion, pointing to a growing backlog which will not be cleared by end of June.
The expenditure on pensions and gratuities for the current financial year has been slashed to Sh111.14 billion from earlier estimates of Sh153.64 billion, according to fresh estimates Treasury Cabinet Secretary Ukur Yatani has tabled in the National Assembly.
This came after Mr Yatani said payroll for the public service pension was growing fast and had crossed 300,000 pensioners and dependants last December.
“The National Treasury will roll out, the much-awaited re-engineered pension management system in the course of the financial year [starting July],”CS said in Budget Speech on April 7.
“The system will offer an end-to-end Enterprise Resource Planning solution in the management and processing of pension benefits.”
The pension’s payroll has continued to surge in recent years on the back of a fast-ageing public service, piling pressure on taxpayers amid delays in implementing reforms in the past.
Latest data shows the Pensions Department had paid out Sh81.67 billion in eight months through February, meaning the department would need to clear an average of Sh17.99 billion monthly for the remainder of the year to hit the full-year target.
The payment of retirees' monthly dues for the eight-month period lagged the full-year prorated target of Sh102.08 billion by Sh20.76 billion.
This is after processing Sh10.21 billion monthly on average against a goal of Sh12.80 billion on a prorated basis.
The Treasury rolled out a contributory pension scheme in January where public service officers are now contributing two percent of their gross pay towards retirement savings, deductions which will increase to five percent next year and 7.5 percent thereafter.
