Ex-civil servants to earn more if MPs pass changes to pensions law

MPs are considering a proposal to increase pensions, allowances and benefits paid to retired civil servants.

Matuga MP Tandaza Sawa has introduced the Pensions (Amendment) Bill, 2024 which seeks to cushion retired government employees from inflation by including an automatic cost of living adjustment to their pensions.

“The principal objective of this Bill is to amend the Pensions Act Cap 189, to include an automatic cost of living adjustment to the pensions earned by all retired public servants,” reads the Bill.

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“An officer who has been in service of the government shall be entitled to an automatic cost of living adjustment increase to the pension, gratuities or other allowances issued under this Act, where the rate of inflation is high enough to substantiate a cost of living adjustment increase,” it adds.

According to the Bill, the automatic cost adjustment shall be calculated based on an increase in the consumer price index within a period of 12 months ending on the 30th of June in each financial year. The consumer price index will be determined by the Kenya National Bureau of Statistics (KNBS).

The year-on-year inflation rate stood at five per cent in April 2024, and was at 5.7 per cent in March. In February, the rate stood at 6.3 per cent which was a decrease from 6.9 per cent in January.

If implemented, the changes will apply to all government employees who retire after the enactment of the Bill.

The new proposal will also require the relevant Cabinet Secretary to publish information on the automatic cost of living adjustment in a Gazette notice.

In addition, the Bill is pushing to have the most current salary applicable to a job group as the basis for the calculation of the pensions payable to public servants.

“Subject to the provisions of any other written law, the most current salary applicable to a job group shall be the basis for computation of the pensions payable to an officer who has been in service of the government who retired in that job group or its equivalent,” reads the Bill.

The Bill comes amid debate on measures to reduce the country’s wage Bill. President William Ruto has said reducing the number of civil servants is among the options.

Speaking during the Third National Wage Bill Conference at the Bomas of Kenya two weeks ago, Ruto said his administration is ready to make painful decisions for substantive reduction of the wage bill.

“As leaders, we have a choice to lead and make a difference. We must stop chasing what is popular but what is right,” said Ruto.

He said Civil Servants with fake academic papers will be the first to go. Ruto said an audit by the Public Service Commission revealed that 2,100 civil servants hold fake certificates.