Civil servants’ payslips will from January 2019 come with an extra hole after the Government made good its intention to make its workers pay for their retirement.
For many years now, civil servants have been enjoying pension without contributing towards their retirement.
But starting January next year, 7.5 per cent of civil servants’ gross salary will be deducted as pension payment.
This is part of Treasury's efforts to implement an International Monetary Fund-backed plan where the Government will cut back on its spending and increase tax revenues.
Those targeted by the new scheme are mainstream civil servants, teachers and members of the disciplined forces.
The Government, the sole contributor to the civil servants’ retirement kitty, will contribute 15 per cent of the gross salary.
The implementation of the new scheme was expected to begin in September but was pushed to January 2019 after consultations with stakeholders that saw Parliament reduce the budget for the scheme to Sh10 billion from Sh15 billion.
“I know we have to do it this time round,” said Treasury PS Kamau Thugge, who also noted the Government had always wanted to move to a defined contribution pension scheme.
“I am really hopeful this time we will start it, hopefully in January,” said Dr Thugge, when Kenya signed the UN Development Assistant Framework in Nairobi yesterday.
For the past 12 years, the Government has been trying to implement a contributory pension scheme with little success.
However, with a cash-strapped Government that has promised the IMF that it will tame its debt appetite as a condition to accessing a $1.5 billion standby credit facility from the Washington-based lender, Treasury is keen to see the scheme implemented.
Thugge said the delay in implementation was due to Parliament's reduction of funds to the proposed scheme.
CS Henry Rotich had said the scheme would start in October, allocating it Sh15 billion.
“The Government has allocated Sh15.3 billion to the scheme in 2018/2019, projected to rise to Sh33.8 billion over the medium term,” said Mr Rotich.
