Kenyan civil servants to pay for retirement from January next year

david nganga

June 27, 2018 11:13 AM

7.5 per cent of the gross salary will be deducted

Kenyan civil servants will from January 2019 be deducted 7.5 per cent of their gross salary as pension payment.

The new move 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.

Public servants have been enjoying pension without contributing towards their retirement, a move that saw taxpayers’ pension burden increase to Sh86.2 billion in the 2017/2018 financial year from Sh15 billion in 2002.

The implementation of the new scheme has been dogged by numerous challenges that have seen its roll-out suspended more than five times since its inception in 2009.

Delay in implementation

However, Treasury PS Kamau Thugge said he is hopeful the scheme will start in January adding that the delay in implementation was due to Parliament's reduction of funds to the proposed scheme.

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.

Treasury is also keen to implement the scheme seeing that the government 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.

david nganga