NAIROBI, Kenya- Kenya’s retirees may soon wave goodbye to the monthly treks to Nairobi in pursuit of their pensions.
Parliament has adopted the Pensions (Amendment) Bill, (National Assembly Bill No. 44 of 2022), promising to expedite pension processing and disbursement to just two months.
The bill, sponsored by Kimilili MP Didmus Barasa, aims to bring much-needed relief to retirees by ensuring a more efficient and timely pension system.
The Amendment introduces a structured timeline for pension disbursement, ensuring that state employees receive their dues promptly.
Government ministries and departments must now submit all necessary documents to the Pensions Department within 30 days of an employee’s retirement.
Following this, the Pensions Department has a 60-day window to process and disburse the pension payments. This legislation is a significant step forward in addressing the long-standing delays that retirees have faced, some waiting up to 20 years for their pensions.
The bill’s passage comes at a critical time, as nearly a third of government employees are set to retire within the next two years.
Barasa emphasized that the amendments will drastically reduce the wait time for pensions, solving the current backlog and ensuring that retirees receive their benefits within 90 days.
The adoption of this bill couldn’t be timelier, given the current cash crisis impacting the pension industry.
The National Treasury has projected that it could process an estimated Sh685 billion in pension benefits over the next three years.
As of February, unremitted pension dues stood at Sh47.6 billion, while PAYE was Sh25.3 billion.
The Parliamentary Budget Office (PBO), which advises MPs on economic matters, has highlighted the urgency of resolving these outstanding payments to ensure financial stability for retirees.
Tigania West MP John Mutunga and Homabay MP Peter Kaluma have both raised concerns about the backlog of pension cases.
Mutunga stressed the importance of timely processing by the pensions department to clear the existing backlog, while Kaluma pointed out the excessively long wait times that many retirees endure.
In a bid to further streamline the pension system, the National Treasury has introduced new caps for pension contributions.
According to a July 10 circular by PS Chris Kiptoo, employees are now required to contribute at least six percent of their pensionable pay, with employers contributing no more than twice the employee’s contribution.
Additionally, public servants will only be entitled to claim their pension once they reach 50 years of age.
These new guidelines override a 2010 directive, which mandated all public defined benefits schemes to convert to defined contribution schemes.
There have also been discussions among MPs about allowing parliamentarians to claim pensions upon exiting service at 45 years of age.
The updated regulations also provide for death-in-service and disability benefits through insurance policies purchased from insurance firms.
