Retired teachers expose taxpayer to Sh123bn debt

The chairman of the House Committee on Education David Koech. The committee accused Attorney- General Githu Muigai of delaying the release of Sh6.7 billion set aside in the past two financial years to pay the retirees.  FILE/NATION MEDIA GROUP

By EDWIN MUTAI

In Summary

• Finance minister Njeru Githae said the government had agreed to pay 29,479 teachers who retired between 1997 to 2002 Sh16.7 billion “as full and final settlement of all claims”.
• However, there was fear that additional claims could arise from those who retired thereafter.
• TSC also raised concerns over the demand by teacher’s lawyers that it pays Sh765 million being costs of the suits the commission lost at the High Court and Court of Appeal.

The Treasury has warned that it will cost the taxpayer a whopping Sh123 billion should teachers who retired between 2003 to 2006 move to court to seek a pension review similar to that awarded to those who retired earlier.

Finance minister Njeru Githae said the government had agreed to pay 29,479 teachers who retired between 1997 to 2002 Sh16.7 billion “as full and final settlement of all claims”. However, there was fear that additional claims could arise from those who retired thereafter.

“Further claims may arise if those who retired between 2003 and 2006 go to court. This means that if you pay those who retired by June 30, 2003, it will amount to disparity in pension for those who left later and the total liability could rise to Sh123 billion, which is is not sustainable,” said Mr Githae.

He raised the red flag at a meeting convened by Parliament’s education committee to interrogate the continued failure by the government to pay teachers who won the court award in Nakuru in 2008.

The court ordered the Teachers Service Commission (TSC) to process the retirees’ pension based on the salaries agreed in 1997 and contained in legal notice number 234 of November 11, 2008.

The committee, chaired by Mosop MP David Koech, accused Attorney- General Githu Muigai of delaying the release of Sh6.7 billion set aside in the past two financial years to pay the retirees.

Mr Githae, Education minister Mutula Kilonzo, Controller of Budget Agnes Odhiambo and TSC secretary Gabriel Longoiboni  blamed Prof Muigai of refusing to move to court to seek a review of two contradictory rulings that have hindered disbursement of the funds.

The Controller of Budget said she could not authorise the withdrawal of the funds from the Consolidated Fund “unless the inconsistencies in the High Court and Court of Appeal rulings ordering payment to retirees are addressed.”

“We are embarrassed that the retirees have not been paid despite funds being set aside in the budget. This has been occasioned by inconsistencies in the Court of Appeal ruling,” said Ms Odhiambo.

She said Article 228 (5) of the Constitution requires the Controller of Budget to ensure that all withdrawals from the Consolidated Fund services are in line with Section 10 Pensions of Act Cap 189.

“What is left is an interpretation of the two apparent contradictions,” she said, adding that the Attorney-General, who failed to appear before the committee had not responded to her letter urging action on the same from May this year.

She said the contradictions in the rulings arose from the Court of Appeal findings that the High Court should not have added the words “should not be drawn,” but went ahead to rule that the retirees package should be computed taking into account all terms as agreed in 1997.

“We expect the AG to move to court and get interpretation on the contradictions within a week. We direct that the AG furnishes this committee with progress on December 13 without fail,” ruled Koech. Mr Githae said legal hitches had hampered the disbursement of the money despite it being budgeted for in the current financial year.

“The issue now rests with the office of the AG. We assure retirees that their dues will be paid once these matters are resolved through court’s interpretation. We have agreed to pay Sh16.7 billion in five installments amounting to Sh3.34 billion,” he said.

Mr Kilonzo criticised the way the retirees had been handled terming it embarrassing.

He said the delay had been occasioned by the demand by the Auditor General, which has been reinforced by the Director of Pensions Ann Mugo, that payments of retirees’ salary must be made in full before processing and submissions of pension claims to the Treasury.

“The director of pension is reinforcing the Kenya National Audit Office stand by stating that the revised pension claim be supported by payment voucher showing the last salary drawn by the retiree in line with regulation 20 of the Pensions Act,” he said.

The minister said this will imply that Sh8.2 billion is required to pay salary arrears for the affected retirees.

TSC also raised concerns over the demand by teacher’s lawyers that it pays Sh765 million being costs of the suits the commission lost at the High Court and Court of Appeal.

“I have been threatened to be committed to jail for failing to implement the court order. The director of pension and I are required in Court on December 6 to give reasons for non compliance,” said Longoiboni.