A parliamentary committee has backed a proposal to pay 370 former MPs who served between 1984 and 2002 a Sh100,000-a-month pension, backdated to July 2010.
At the outset, that plan could cost at least Sh2.9 billion for payments of 37 million per month for the 79 months that have elapsed between now and July 2010.
The Finance, Trade and Planning Committee gave its backing by deeming acceptable the former MPs’ proposal contained in a petition submitted to Parliament by Rarieda MP Nicolas Gumbo on their behalf.
That lot is currently paid a pension of between Sh2,700 and Sh14,000 per month. This is because MPs decided in 2003 to increase their salaries, their salaries were low as they were determined by Treasury.
“These low pensions are a clear mismatch of the current economic realities,” the committee said in the report tabled in the National Assembly on Tuesday afternoon.
Mr Gumbo and other MPs have argued that the former lawmakers live in abject poverty, which is bad as they are deemed the face of Parliament.
A tribunal headed by retired judge Akilano Akiwumi had in 2009 recommended that former MPs receive $1,000 a month as “living and minimum monthly pension”.
Parliament debated and adopted the Akiwumi report on June, 2010, thus the decision to have the pension plan implemented from July 1 that year.
To put this into effect, MPs will have to amend the Parliamentary Pensions Act. That was also the condition set by the court after the former MPs filed a case over the same matter.
HIGHER BUDGETARY RIPPLE EFFECT
A total of Sh2.9 billion can pay for the leasing of medical equipment for 24 counties for the next financial year and is more than enough to fund the rehabilitation of youth polytechnics in the Budget, which has been allocated Sh2 billion.
The committee said the allocation for the former MPs should be included in the Budget for financial year 2017/18. But, Treasury could scuttle the idea as it had opposed the proposal in the petition.
Treasury could however scuttle the idea as it opposed the proposal in the petition in its submission to the Finance Committee as it handled the matter.
“The requested amendment to the Act has a major immediate financial implication, and as discussed in the foregoing sections, a higher budgetary ripple effect should other retirees require equal treatment, including possible litigations,” Treasury Principal Secretary Dr Kamau Thugge said.
Dr Thugge also pointed out the effect increasing the pension would have on the wage bill, which has been a major point of concern as the country implements the Constitution enacted in 2010.
“It is notable that the Salaries and Remunerations Commission has recently undertaken an actuarial study to guide the review of all low pensions and the MPS will benefit from the same. This is a better approach, which takes all retirees into consideration,” he added.
Dr Thugge also argued that the pension for retired judges, permanent secretaries and other senior civil servants who worked before salaries were increased are also low and increasing that for former MPs would likely trigger a similar demand from them.
“If the minimum Parliamentary pensions are increased to Sh100,000, there would be pressure from those retired MPs earning higher pensions that they also be considered for a similar increase, for equity,” said the PS.
He argued that a former MP who served for three terms would feel aggrieved if another one who served for a shorter period has their pension increased to almost what he gets.
Former MPs who have served two terms or more, amongst them Cord heads Raila Odinga and Kalonzo Musyoka, are paid $1,000 as pension per month.
Treasury also argued that none of the eight countries used as a benchmark – Uganda, Tanzania, Rwanda, South Africa, Singapore, India and the United Kingdom – except India has a provision for living pension, which is paid until the person dies.
Under the current Act, MPs contribute at the rate of 12.6 per cent of their pensionable earnings, with the government putting in 25.2 per cent, twice what the MP pays.
Increasing it would therefore result in current MPs paying more, 16 per cent, and the government putting in 32.1 per cent, according to Treasury.
“Retired MPs in particular are no longer earning a pensionable emolument as required under the Act and therefore cannot contribute,” said Dr Thugge.