Wean retirees off State's teat

Opinion and Analysis

President Kenyatta with Lamu County leaders and deputy president William Ruto (right) at State House in Nairobi. Kenya and China signed a Sh42 billion Lamu Port project deal at State House on August 1, 2014. PHOTO | EVANS HABIL | NATION 

In Summary

Having set aside of Sh7 billion for the half year to June 2015, the Treasury should now quickly wean off retired civil servants from relying on the State.

The revelation that the government holds pension liabilities to the tune of Sh800 billion is stunning given the huge financial constraints that it is facing in the annual Budget. The amount has been growing over the years, expanding by Sh300 billion or an average of Sh60 billion per annum during the five-year period.

 

It demonstrates clearly that unless the problem is tackled right away, it will continue to grow yet it cannot avoided. The government has attempted piecemeal solutions such as raising the retirement date from 55 to 60 years and yet the burden has not gone away.

In fact, the demands on the government finances have only increased in the interim especially with the construction of mega projects consuming hundreds of billions of shillings. It is a welcome move to hear that the Treasury is considering various options to settle the Sh800 billion pension debts once and for all.

A major solution to stop the piling up of the pension liabilities had been found in the form of a contributory scheme to replace the system where the retirees were paid directly from the Treasury, but the State has continuously dithered in implementation.

Action on the new scheme cannot be delayed any further. Having set aside of Sh7 billion for the half year to June 2015, the Treasury should now quickly wean off retired civil servants from relying on the State.