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Economy

MPs in secret push for Sh7m pension payout

Should PSC get its way, the money will be paid
Should PSC get its way, the money will be paid to former MPs who lost their seats in last year's General Election after serving only one term. FILE PHOTO | NMG 

Parliament is secretly pushing the Treasury to pay over 300 former MPs a send-off package of at least Sh7 million each in defiance of the law.

The Parliamentary Service Commission (PSC) has asked the Treasury to allocate Sh2.1 billion in the supplementary budget for approval when MPs resume from recess on February 12, according to correspondence seen by the Business Daily.

Should PSC get its way, the money will be paid to former MPs who lost their seats in last year's General Election after serving only one term.

The latest push for yet another hefty payout comes despite the Pension Department having paid the former lawmakers about Sh5.9 million each as an exit package last year. The one-off payment was yet another reflection of the growing burden of keeping top public servants comfortable in retirement.

Parliament is now arguing that the Salaries and Remuneration Commission (SRC) was wrong in stopping the Sh2.1 billion send-off pay that PSC is now demanding. It argues that MPs must get an exit pay equivalent to 31 per cent of the total pay they earned during their term in office like other State officers such as governors.

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MPs have in recent years gained notoriety for arm-twisting the Treasury and the salaries commission to line their pockets with fat pay cheques and perks, making them among the best paid in the region.

The PSC, the MPs’ employer, had earlier this month sent a letter to the Pensions Department asking Treasury to calculate the additional exit package for inclusion in the supplementary budget.

However, the law does not support the proposed pay. “It has been determined that the commission should request the National Treasury for the full amount of gratuity that would accrue to all one-term members of the 11th Parliament in the forthcoming 2nd supplementary budget,” says the letter signed by PSC secretary Jeremiah Nyegenye.

“For budgeting purposes, this is to request you to calculate the total amount of gratuity that would be due to all one-term members. ”The salaries commission has advised against the proposed send-off package. SRC maintains that the MPs cannot be offered both a minimum gratuity of Sh7 million and a refund of their pension contributions, which includes a share of government contribution and an annual interest of 15 per cent for the five years they were in office.

Parliament, on the other hand, says the former MPs are willing to refund the government contribution once they get the Sh2.1 billion. “Once the funds are received, the commission (PSC) would then pay to the Pensions Department the government contribution that had been paid to the said members,” Mr Nyegenye says in the letter to the Treasury.

If Parliament gets its way, the 304 MPs and senators who lost in the August 8 elections will cumulatively receive Sh2.12 billion as a golden parachute for serving a single term in Parliament.

The former MPs have been pushing for the speedy payment of the additional cash, hence the pressure that their employer is piling on the Treasury.

The payment looks set to stoke anger among Kenyans who view MPs as overpaid. Besides their fat salaries of more than Sh1 million, MPs are entitled to a Sh5 million car grant, a Sh20 million mortgage, a Sh7 million car loan, monthly airtime of Sh15,000 and Sh10 million medical insurance.

A top Treasury official has termed the proposed send-off package illegal, arguing that the Parliamentary Pensions Act does not support the golden parachute that the MPs are demanding.

“The law only recognises two payments for exiting MPs; a refund for one-term MPs and life-long pension for those who have served for at least two-terms,” said the official who sought anonymity for fear of upsetting MPs .

Ironically, some members of the 10th Parliament, whose term ended in 2013, walked away with both the pension and the send-off package.

This set a bad precedent that Parliament is now using to pursue the secret Sh2.1 billion payoff. The Parliamentary Pensions Act stipulates that only those who serve for two terms or more are entitled to a monthly pension of at least Sh125,000 for the rest of their lives.

That means an MP who served for four terms between 1992 and 2013 for instance earns a monthly pension of about Sh194,000.MPs who lose after serving one term are refunded the monthly pension that was deducted from their pay.

They also get the government’s top-up and an additional 15 per cent interest for every year that they served.

As a rule, lawmakers pay 12.75 percent of their salary as their pension contribution. This is the amount that is matched by the State.

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