Blow to MPs as SRC objects to proposed law on pension

Members of Parliament have suffered a major blow after the Salaries and Remuneration Commission (SRC) rejected a proposed law that seeks to have those who have served for less than two terms eligible for pension.

Instead, SRC has limited gratuity to those who have served for one term (five years) or less.
The commission says in a memorandum to the National Assembly that the Parliamentary Pensions (Amendment) Bill 2023 is illegal and unconstitutional.

In the communication signed by Chief Executive Officer Anne Gitau, the commission tells the lawmakers that pension is an employment benefit and therefore remains the mandate of the commission.
“Any legislative proposal or review thereof is subject to the mandate of SRC as provided for in the constitution,” wrote Gitau.

She adds, “The Bill infringes SRC’s mandate. Given the foregoing, SRC is of the considered view that the proposal to review the pension benefits for state officers in parliament is in contravention of the constitution and therefore unconstitutional.”

The Bill also proposes that an MP who has served for more than one term may opt to be paid a gratuity “in lieu” of a pension at the end of the term of parliament.

According to the Bill, if after receiving a gratuity, a member opts to pay pension contributions, he will be required to refund all the gratuity paid to them plus interest at the rate of three per cent per month for 15 months from the date they elect to be pensionable.

The commission further states that the proposal creates the impression that only MPs who have served an aggregate of five years or less are eligible for payment of gratuity and those who have been in parliament for less than 10 years are eligible for pension.

One term

Instead, SRC wants the clause deleted from the Bill in favour of a proposal that will allow only MPs who have previously served for at least one term chose to be paid either a pension or a gratuity.

Currently, only MPs who serve for at least two terms are eligible to a lump-sum of Sh7 million before tax of 30 per cent and a monthly pension of Sh118,000.

Those who have served less than ten years are eligible for a service gratuity at the rate of 31 per cent of their basic pay and a refund of their contribution plus the 60 percent worth of government contribution.

In the last parliament, the Parliamentary Service Commission (PSC) had on January 31, 2019, requested SRC to review the remuneration and benefits for state officers serving in parliament.

Without interest

But on March 13, 2019, SRC set that MPs who serve one term in parliament and are not re-elected shall only be entitled to a service gratuity at the rate of 31 per cent of their monthly basic pay at the end of their term as well as a refund of their contributions without interest.

In this case, each MP is required to contribute Sh45,000 every month while the government through the PSC, the MPs’ employer, contributes double the amount for MPs who have served in parliament for at least two terms of five years each.

SRC further states that no state officer should benefit from pension and gratuity benefits from the same public employer for a similar period.

“Any public institution that desires to have remuneration and benefits of its state officers including pension reviewed, is required to submit in writing to SRC as required by the constitution, providing among others, justification for the request and confirmation of the availability of funds for the proposed review,” says Gitau.

In their contribution to the proposed bill, former MPs demanded for their retirement benefits to be pegged on the dollar in the wake of the depreciating shilling.

Former Parliamentarians Association of Kenya (FOPAK) comprising of the legislators who served between the 1970s to 2001, said that some members have been missing their pension dues with others getting as little as Sh3,000.

MPs who served before 1984 have been receiving between Sh3000 and Sh10,000 monthly, according to former Alego Usonga MP Otieno Mak’Onyango.

While making submissions before the Finance Committee of the National Assembly, the former legislators demanded a standardised rate that would match how the pension is paid across the world.

“We recommend that the rate be set at $1000 (Sh144, 547) which is the minimum payable among common countries. All we are trying to do is bring Kenya in harmony with the rest of the world,” Mak’Onyango told the committee which is chaired by Molo MP Kimani Kuria.