THE PUBLIC SERVICE PENSION PLAN

The government provides retirement benefits to public officers as part of their terms of service, with a view to providing them with social security in old age as stipulated in Article 43(1)(e) of the Constitution of Kenya, 2010.

Provision of retirement benefits to public officers is intended to ensure a smooth transition from active service with employment income, to retirement with a certain level of replacement income.

This is so that the standard of living for public officers does not change drastically in old age. The retirement benefits are in form of pension and other non-pension benefits.

Retirement benefits in the public service are governed through various laws and regulations, government circulars and directives, including the National Treasury Circular No. 18 of 2010, and SRC Gazette Notices of 2017 for State officers, the Retirement Benefit Act 1997, the Income Tax law, and Trust Deed and Rules, which are State agency specific.

Other circulars and statutes include: Pension Act; Pensions Increase Act; Widows’ and Children’s Pensions Act; Parliamentary Pensions Act; Presidential Retirement Benefits Act; Public Service Superannuation Scheme (PSSS) Act; and National Social Security Fund (NSSF) Act.

Others are; Kenya Defence Forces (Pensions and Gratuities) Regulations, 2017; County Governments Retirement Scheme Act; and SRC Gazette Notices of 2013 and 2017 (gratuity benefit for State officers in the National and County Governments).

The laws and regulations provide varying retirement benefits for State and public officers, which has led to inequities and a rising pension bill. This situation arises owing to the absence of an over-arching retirement benefits policy in the public service that sets the guiding principles to be applied across board on structuring and management of retirement benefits for public servants in the country.

The management of the public service pension liability for a fiscally sustainable public service wage bill has been an ongoing conversation among stakeholders. It is envisaged that the National Treasury, in collaboration with other actors, will develop a National Pensions Policy and consolidate and harmonise the public service pension laws at the national and county governments level.

The need to develop a Retirement Benefits Policy for the public service was in realisation that there currently does not exist a retirement benefits policy to guide the necessary reforms in the management of retirement benefits in the public service.

In the absence of a common policy framework to guide on the provision and management of retirement benefits in the public service, different public service institutions have continued to set up separate retirement benefit schemes with different scheme designs and provisions.

The practice has created inequity and unfairness within and across the public service, which has been a basis for requests for parity of treatment. Further, the public service retirement benefits bill has continued to rise, largely attributed to the existence of non-contributory schemes and upward review of salaries.

SRC has a mandate to determine, review and advice on remuneration and benefits payable in the national and county governments, including retirement benefits.

The case for the review of public service retirement benefits and the need for a policy is premised on the platform that SRC requires to address the growing pension bill to ensure its fiscal sustainability. This also requires addressing the disparities in the provision of retirement benefits to ensure the benefits are harmonised, fair and equitable.

By harmonising public service retirement benefits, SRC will have endeared itself to the principle of equity and fairness. Harmonisation will also lead to considerable cost and operational efficiencies.