Governors and their deputies have suffered a major blow after High Court found that they are not entitled to a Defined Benefit Pension Scheme, similar to one enjoyed by State officers at the national government.
Justice Lawrence Mugambi declined a plea by the Council of Governors (CoG) to compel the Salaries and Remuneration Commission (SRC) to pay them over Sh2.3 billion annually in retirement perks.
"This court cannot accept an invitation to compel the SRC to provide governors and their deputies specifically with a defined benefit scheme that the CoG is pushing for. That will be usurping the SRC’s constitutional and statutory mandate," Justice Mugambi ruled.
He said that the court can only intervene if it is demonstrated there has been abuse of discretion in exercise of that mandate by SRC.
"This court’s intervention can only be called upon if there is illegality or omission to undertake a constitutional mandate by the SRC of which the CoG has failed to demonstrate in this petition," he said.
While dismissing the petition, the judge concurred with SRC that allowing payout would be an additional burden to taxpayers and would have a ripple effect on all State officers at the national and county government levels, leaving little resources for development and service delivery.
"Allowing the defined benefit pension for governors and their deputies will be disproportionately burdensome to the successor governments and generations that have to bear the burden of underwriting the cost of a lifetime benefit when the option of gratuity, which if managed well can provide adequate social security," said Justice Mugambi.
The Judge said the CoG claim that the SRC has failed to provide a retirement benefit for the Governors and their deputies thereby violating Article 43 (1) (e) is not tenable in view of the payment of gratuity equivalent to 31 per cent total basic pay for every year served at the end of each term and the additional option that exists of joining a direct contributory benefit scheme for governors and the deputies.
"The court finds that contrary to the allegations made by the petitioner, SRC has already set out retirement benefits in form of gratuity payment and approved the policy for the establishment of direct contributory scheme for state officers at the County level who include the Governors," the judge said.
He also found that the proposed Defined Benefit Pension Scheme for governors and deputy governors is neither affordable nor fiscally sustainable.
Governors and their deputies were seeking a lifetime monthly pension of Sh739,200 and Sh700,000 respectively, in line with the payouts offered to retired presidents, deputy presidents, Chief Justices and parliamentary Speakers.
Besides the monthly pay, they were also seeking a lump sum payment equivalent to their one- year pay, a 3,000cc four-wheel-drive car, fuel allowance, a driver, a personal assistant and a medical cover for local and overseas treatment.
But SRC opposed the request by the CoG, saying that it is untenable to grant the governors and their deputies lifetime pensions.
The commission argued that funding for pension schemes comes from government revenues, which primarily consist of taxes collected from Kenyans used to provide for social amenities such as health, education, clean water and proper sanitation
among others.
" Approving the petitioner’s proposal would have a ripple effect on the amount left to cater for these important social amenities, thus exposing the taxpayers to violation of their rights as enshrined in the Constitution," SRC told the court.
