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Kenya Ups Pension Payout

By Anthony Kagiri, www.capitalfm.co

July 27, 2009




A statement from the Pensions Department said on Monday that the monthly pension had been increased at the rate of three percent or Sh300, whichever is higher.

“Following the increase, the minimum pension has risen from Sh2,300 per month to Sh2,600. Pensioners will be paid their new monthly pension rate through the July 2009 payroll,” said the statement in part.

However, increase for dependants and widows and children which require some manual calculations will be effected in the August.

“Theirs will be paid in arrears with effect from 1st of July,” the department assured.

This is the third pension increase following Cabinet approval in 2006 and an amendment to the Pensions Increase Act, which provides that pension be increased every two years at the average inflation rate but capped at a maximum of three percent. The pension budget for this fiscal year is Sh24.3 billion for the payment of pensions and gratuities.

The government in March raised the retirement age for civil servants from 55 to 60 years in a bid to reduce the number of pensioners and give them more time to give their input. 

Public Service Minister Dalmas Otieno also announced a new contributory public service scheme and said that the age raise would give the government time to programme for resources to fund the new pension scheme and allow room for introduction and operationalisation of the (public service) scheme. 

Under the new scheme persons with disabilities will be allowed to work up to the age of 65 years if they so wish. Early retirement will remain at the age of 50 and other areas like retirement in public interest, medical grounds, from the disciplined services or due to abolition of offices will remain the same.

The new contributory public service scheme, which also kicks off this month, will require civil servants to make a monthly contribution of 7.5 percent from their salaries while the government will put in 15 percent.

Public service employees will also be able to access their contributions upon leaving employment and only wait for the government’s contribution at age 65. The Minister further said that deductions will be increased over three years before hitting the 7.5 percent of pay.

In the first year, public servants will contribute two percent, in the second year five percent and by the third year they will be expected to pay the 7.5 percent.

12,000 employees were meant to join the list of retirees. Currently the civil service has about 93,000 employees and 245,000 teachers. Military officers are, however, not included.

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