President William Ruto’s administration is yet again going to face another sleepless nights in the next three financial years owing to the pressure of pension’s liabilities
This is after, Treasury raised a red flag over the growing huge number of pensioners, alongside debt repayments costs which has made the current regime enforce Finance Act, 2023
Some 30,155 workers are expected to retire this financial year ending June, 2024, with the number expected to fall to 28,745 in the year that follows and 26, 500 thereafter, according to the estimates by the Treasury
The Pension Department at the National Treasury have disclosed to safinews.co.ke that they are processing 85, 400 claims in the review period, signalling huge budget expected as the law requires retirees to receive pension a month after exit
The Treasury has already budgeted Sh189.09 billion towards pension expenses in the current year, a value that is expected to climb to Sh207.85 billion in the 2024/2025 financial year and further to Sh228.61 billion in the fiscal year that will follow
The pension expenses triggered by the mass retirements, which has also brought to the fore job crisis in the aging civil service, have joined debt expenses in denying the Ruto’s administration funds it needs for priority projects like roads, power transmissions lines and affordable housing units
Treasury Cabinet Secretary Prof Njuguna Ndung’u has already issued an alert over mounting pension bill, warning that the expenses is a major risk to the budget
“With the increasing number of retired officers, dependants and the increased life expectancy rate, the pension wage bill has been increasing exponentially posing a fiscal risk,” Prof Njuguna Ndung’u wrote in the 2023 Budget Policy Statement [BPS] a document that provides an expenditure guideline for thw government.
To further mitigate the fiscal risk, the government will ensure timely remittance of the required contribution to defined contributions schemes to reduce possible litigation costs and encourage appropriate investment choices.”
Disbursements of cash towards pensions, gratuity and Public Service Superannuation Schemes [PSSS] significantly fell short of the target by Sh36.28 billion in the year ended June
This is after the Treasury released Sh136.36 billion, which was 21.02 percent off the Sh172.64 billion goal for the fiscal year
The pension amount disbursed represented a rare Sh9.27 billion or 6.37 percent before which marked the end of President Uhuru Kenyatta’s maximum two-term rule of five years each