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State pension pay to rise 29pc next year

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The Treasury will spend nearly a third more on paying pensioners in the fiscal year beginning July. FILE PHOTO | NMG

The Treasury will spend nearly a third more on paying pensioners in the fiscal year beginning July, with the actual total amount to be spent for the first time expected to exceed Sh100 billion.

According to estimates released to Parliament, the total pensions and gratuities paid will amount to Sh119.19 billion, from revised estimates of Sh92.49 billion of the fiscal year ending in June.

This is Sh26.7 billion or 29 percent higher. It underlines the extent of liabilities the public has to carry as a result of delayed implementation of the contributory scheme mooted by the State nearly a decade ago.

The 2019/20 budget had initially indicated the total spending on pensions and gratuities would be Sh108.6 billion, but slow processing of applications due to an outdated information management system has led to a shortfall in the amount expected to be paid by June, the Treasury said.

“[Among] the challenges encountered in the implementation of the budget during the period under review are…the slow pace in operationalisation of pensions contribution scheme, slow Pension Management Information System,” it said.

The Treasury noted that recurrent spending was below the projected target “mainly on account of lower than targeted pensions payments. The shortfall in pensions and other consolidated fund services was due to slower than targeted processing of pension payments in the recurrent category.”

“The above challenges are being addressed through…procuring new pension system… implementation of civil servants contributory scheme.”

Counties were also found to be encountering the pensions problem and the Treasury was expected to issue guidelines to enable them to implement the contributory scheme as well as consider additional allocation for unpaid arrears.

“The National Treasury should issue guidelines to counties on the operationalisation of the new contributory pension scheme and consider an additional budgetary allocation to cater for backdated contribution to the proposed schemes for the period before the enactment of the new [pensions] law,” noted the Treasury in a record of proposals from stakeholders in earlier consultations.