PERKS

MPs resurrect Sh100,000 monthly pension for retired colleagues

Bill had been rejected by President Uhuru Kenyatta when it was first passed in 2020

In Summary

•Section 8 of the Parliamentary Pensions Act says that pension be paid to MPs who have served an aggregate period of two terms.

•Only those who have attained the age of 45 years are eligible, those serving one term only get three times their monthly pension deductions plus 15 per cent interest.

National Assembly chamber
National Assembly chamber
Image: FILE

Lawmakers have sneaked back a law seeking to hand their colleagues who served between 1984 and 2000 a monthly Sh100,000 pension for life.

The National Assembly undertook the first reading of the Parliamentary Pensions Bill, 2022, containing the revised changes to the retirement benefits law.

The bill sponsored by Mwatate MP Andrew Mwadime seeks to remove the requirement that only those who served two terms during the referenced period should benefit.

Section 8 of the Parliamentary Pensions Act says pensions should be paid to MPs who have served an aggregate period of two terms and attained the age of 45.

“Notwithstanding Section 8 (2) of the Act, a former MP who, having served in Parliament between July 1, 1984 and January 1, 2001 is entitled to monthly pension," the bill reads.

"Whose monthly pension amounts to less than Sh100,000, shall be entitled to a monthly pension of Sh100,000."

Nearly 500 former MPs earn about Sh33,000 monthly, hence taxpayers would have to raise Sh33.5 million more every month to meet the costs of additional payout.

The payment, should MPs pass the bill and the same assented to by President Uhuru Kenyatta, would be backdated to July 1, 2010.

Some of the former MPs are dead and hence their families may be entitled to half of what they were to be paid.

Mwadime, in the bill’s memorandum of objects, said: “This is in light of the fact that despite serving the nation, some former MPs are languishing in poverty and there is need to take care of their welfare.”

The MP said the changes are in line with the recommendations of the Akilano Akiwumi Tribunal, which was appointed by the Parliamentary Service Commission to review the terms and conditions of service of MPs and Parliament employees.

“The Tribunal submitted its report on November 12, 2009 and one of its recommendations was that the 500 former MPs be paid the equivalent of $1,000(Sh100,000) each as living pension with effect from July 1, 2010,” Mwadime said.

He explained that PSC adopted the report in June 2010 and resolved that any former MPs earning less than Sh100,000 monthly be paid the pension as proposed.

Former MPs were not covered in the pensions law which was enacted in 2002.

The existing law provides Sh127,800 monthly pay for MPs who have served two terms. Members are paid after earning a lump sum of Sh7.7 million.

Those who lose after serving one term are refunded three times their monthly pension deducted from their pay plus 15 per cent interest for every year served.

However, it remains unclear how the bill would be received by critical actors among them the National Treasury which opposed the proposal when it was first introduced by Minority leader John Mbadi in 2019.

The exchequer at that time said there was no basis for increasing the pension to Sh100,000 as payment of benefits is based on salary.

It also warned that backdating the payments would amount to rewarding oneself for service not rendered and granting the increase would stretch the government’s pension contribution.

“Any recovery from the proposal would attract 15 per cent interest resulting in a large sum of money that may take many years to pay,” Treasury said in a memorandum to MPs. 

“This would lead to a huge increase in the public pensions wage bill thereby negating the efforts by the government to tame the rising public wage bill."

Kenyatta also rejected the bid to hand the retired MPs a Sh100,000 monthly pension saying there would be challenges with implementing the proposal.

His argument was that the members were not contributing pension at that rate.

Uhuru rejected the bill as was voted by MPs in August 2020 following the recommendation of the Finance Committee after engaging stakeholders.

He said the pension payment would cost an average of Sh444 million annually and risked staging similar demands by other retired public officers.

“The ripple effect is unaffordable and fiscally unsustainable," Uhuru said.

(Edited by Tabnacha O)

“WATCH: The latest videos from the Star”