Hurdles delay rollout of civil servants pension plan

Public Service Secretary Sicily Kariuki and the Union of the Kenya Civil Servants Secretary General Tom Odege during the signing of the CBA for increase of salaries and allowances. FILE PHOTO | NMG 

By EDWIN OKOTH

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Summary

• Some of the issues standing in the way of the new scheme include the pending appointment of the board of trustees and reorganisation of the payroll to accommodate recent salary increases.
• The scheme that was to start with the commencement of the new public service pay rates had caused a standoff between the Treasury and Kenya National Union of Teachers, who said they had not been consulted.
• The Union of Civil Servants of Kenya acting Secretary-General Jerry Ole Kina said all parties had agreed on the suspension.

The rollout of the civil servants contributory pension scheme that was to begin last month has been suspended once again to give the government time to resolve outstanding logistical challenges.

Some of the issues standing in the way of the new scheme include the pending appointment of the board of trustees and reorganisation of the payroll to accommodate recent salary increases.

“This month was loaded with pay increase adjustments, which hampered the start of the new scheme but that does not mean it has failed,” Director of pensions at the Treasury Shem Nyakutu said.

“We will simply load and recover from the other months salaries. Trustees will meet to decide whether we recover once or spread it over a period.”

Mr Nyakutu said deduction of monthly contributions from members’ pay will begin in September but with July as the starting date, setting up qualified employees for backdated deductions.    

READ: Pension schemes chiefs face jail over late financial results

Such deductions months after the civil servants started enjoying increased salaries risks sparking a fresh row with the employees, who may see it as amounting to taking a pay-cut.

The scheme that was to start with the commencement of the new public service pay rates had caused a standoff between the Treasury and Kenya National Union of Teachers, who said they had not been consulted.

READ: Teachers up in arms over new pension plan

The Union of Civil Servants of Kenya acting Secretary-General Jerry Ole Kina said all parties had agreed on the suspension.

Under the new scheme, civil servants will contribute 7.5 per cent of their monthly pay and their employer puts in another 15 per cent. The funds will then be invested for the benefit of the retirees.

Former Retirement Benefit Authority Chief Executive Edward Odundo, who has been appointed to chair the scheme’s board of trustees, blamed the delay on the lack of quorum in the board that was meant to discuss the roll out plan.

“Three unions had nominated trustees but we were waiting for their appointment by Treassury Cabinet Secretary before we have a meeting,” Mr Odundo said.