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2020-21 BUDGET

Parliament must protect retiree’s pension from taxation

Unlike in the US, there is no fear of retribution by voters in Kenya on anything the government does.

In Summary

• Pension in Kenya is money one must have to survive in retirement, especially those who have no other source of income.

• Let this golden generation enjoy their retirement with what they are getting in pension money

Treasury CS Ukur Yatani on June 11, 2020
Treasury CS Ukur Yatani on June 11, 2020
Image: EZEKIEL AMING'A

In Western countries such as the US, certain things are sacrosanct such that you mess with them as a politician, you say goodbye your job. Tinkering with social security is one of those things.

Americans love their social security and do not want it touched, even when everyone agrees the system is broken and needs to be fixed.

If fixing the system makes it harder for retirees to enjoy their benefits in full, then such proposals die because they vote in large numbers to punish those who vote for such. This fear has ensured retirees enjoy their benefits, not as a gift but something they worked hard for through their productive days.

Treasury CS Ukur Yatani read the Sh1.6 trillion 2020-21 budget, which will be financed by tax revenue, financial aid, and debt. He said the budget will stimulate the economy and safeguard jobs and businesses.

Many, however, wonder whether this budget is realistic or whether its goals and objectives will be met, given the Covid-19 pandemic.

Be that as it may, one of the measures that has retired people and those who advocate for them, is the proposal to tax pensions. According to the budget, monthly or lumpsum pension granted to a person who is 65 years of age or more; and bonuses, overtime and retirement benefits paid to low-income employees will be taxable.

Pension in Kenya is money one must have to survive in retirement, especially those who have no other source of income.

Unlike in the US, there is no fear of retribution by voters in Kenya on anything the government does. This is because all that matters is availability of working computers to rig themselves back to office.

BBI is intended to fix that and many are hopeful that it does.

For now, we have something of more immediate that needs to be fixed and that is to make sure pension is not taxed as proposed.

Social security has been steadily sacrosanct in America because it is the only source of income for many retirees and their children are often struggling themselves to offer any help. Ditto pensions in Kenya.

Given we know voting is not an option to effect this plea not to tax pensions, the only means is to simply appeal to President Uhuru Kenyatta and Parliament to spare these retirees.

Former Cabinet minister and veteran politician Joe Nyagah, who has always fought for ordinary Kenyans, is leading in efforts to advocate for retirees, especially those receiving pensions that he believes are being victimised with the proposed taxation.

“I am one of the retirees having worked as a public servant for many years,” Nyagah recently said in an article. adding that “for most of the retirees, the only source of income that they have is the pension that they get [so reducing] the small pensions that they get will lead them to miserable lives.”

Nyagah then poses the question, “[Why] does the government want them to die or live in poverty by taxing their meagre pensions in the new budget?”

It is a good question anyone with heart should answer that the government should not do this. As Nyagah concludes in the piece, “[the] old people have played their part in contributing towards the past success of this country. Please do not punish them in their twilight years.”

We should not. Let this golden generation enjoy their retirement with what they are getting in pension money. The government can easily find ways to offset the shortfall in the budget from what little it expected to raise from this tax.

It is the African thing to do for our ageing population.

Samuel Omwenga is a legal analyst and political commentator