Retired public servants inched closer to getting a review of their pensions after a bill proposing to peg their annuity on inflation adjustments was brought to the National Assembly.
The bill seeks to amend the Pensions Act, to include an automatic cost of living adjustments to the pensions earned by all retired public servants.
The Kassim Tandaza sponsored bill further seeks to provide for the use of the most current salary applicable to a job group as the basis for the calculation of the pension payable to the public servant who is retired in the job group or its equivalent.
If implemented, the automatic cost of living adjustment shall be calculated based on an increase in the consumer price index within 12 months ending on June 30 in each financial year.
“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,” the Bill by the Matuga MP reads in part.
The Bill defines the consumer price index as a measure of changes in the prices of goods and services purchased by households, which directly or indirectly fulfil their needs and wants.
Additionally, it provides that the Cabinet Secretary will be responsible for publishing information regarding automatic cost-of-living adjustments in the Gazette.
It also defines the cost of living as the amount required to cover basic expenses, including housing, food, healthcare, clothing and education.
The review comes at a time that the government is staring at the retirement of more than 85,000 public servants in the next three financial years.
This is set to put further pressure on taxpayers with pension bills projected to average nearly Sh210 billion annually in the review period.
The National Treasury last year in July raised the red flag over the rising pension liabilities, which, alongside debt repayment costs, will give President William Ruto's administration sleepless nights in the next three years starting July 2023.
The Pensions Department at the National Treasury plans to process 85,400 claims in the review period, signalling the number of public workers expected to retire.
Some 30,155 workers are expected to leave work by end of June 2024, with the number expected to fall to 28,745 in 2025 and 26,500 in 2026, according estimates by the National Treasury.
