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Treasury moves to reform pensions

The National Treasury has kicked off the process of updating the country’s pension legislation in a move that could affect how civil servants receive retirement dues.

In a notice published Thursday, Treasury said the project is under the World Bank’s Financial Sector Support Project and is expected to take six months. 

“The overall objective of this consultancy is to develop a comprehensive National Retirement Benefits Policy to be implemented over a period of six months,” said the notice.

This will also involve reviewing the current retirement benefits’ legal and regulatory framework and advise the State on gaps. 

“The project will also review the draft retirement benefits policy, formulate a strategy to update this draft and update it to incorporate emerging issues (such as) inclusion of the micro pensions sub-sector and county pensions administration,” Treasury said.

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Rising wage bill

The move comes on the back of mounting concern that the country is sitting on a pension time-bomb as more civil servants attain retirement age.

In August, Treasury Cabinet Secretary Ukur Yatani informed public officials in a circular that they would begin footing part of their pension contributions beginning January 2021. 

Although the decision has been a long time coming, depressed revenue collection and mounting debt repayments have eaten into the government funds, adding to taxpayers’ burden of sustaining the wage bill

“The pension wage bill that rose from Sh27.9 billion in the 2013-14 financial year to Sh86.7 billion in 2019-20 is projected to cross the Sh100 billion mark in the current financial year 2020/21,” said Mr Yatani.

“It is clear that this situation cannot wait any longer, therefore giving urgency for the roll-out of the contributory scheme.” 

Read the Original Article on The Standard