Secrets of Members of Parliament pay deal

By ALEX NDEGWA

NAIROBI, KENYA: Members of Parliament have walked away with a much better salary package than they would have you believe, we can now report.

They may even end up earning more than MPs who served in the Tenth Parliament. By taking a large cash payment upfront and forcing the salaries commission to abandon ceilings on their allowances, they have effectively increased their total take-home pay by more than Sh300,000 a month. “We have a better deal than what the media has brought out,” a legislator serving a second term said on Friday. “But that is a story for another day.”

The Standard On Saturday has learned the battle to raise their basic pay was a ploy to divert attention from the real increases. MPs ‘lost’ the push to have their basic salary raised from Sh532,500 to Sh851,000, but secured concessions allowing them to pocket more money through their allowances. The devil is in the details of a new deal between the Salaries and Remuneration Commission (SRC) and the Parliamentary Service Commission (PSC).

The basic salary itself is structured to keep rising each year by Sh44,375 peaking at Sh710,000 in the fifth year. Over the life of Parliament, this works out to Sh651,250 a month. MPs also get a payment of Sh5 million upfront as a ‘car grant’. However, this is in addition to an ‘optional’ car loan of Sh7 million, which suggests it is really a disguised advance payment of Sh83,333 a month.

Mileage allowances

Taken together, the changes raise the benefits paid out to MPs from about Sh900,000 a month, as proposed by the SRC, to about Sh1.2 million monthly. The amount excludes the weekly mileage allowances paid out to members as reimbursement for travel costs to their constituencies. These amounts, which can run into the hundreds of thousands each month, will be even higher than in the past following an increase in the rates paid per kilometre travelled.

Parliament has already started processing the salaries for MPs. Some have even applied for the Sh5 million grant, a sign they are happy with the deal. They also plan to take up the optional Sh7 million car loan.

“Majority of us started filling out forms for the car loan after the Monday night agreement to take out money which should have been paid to us three months ago,” said an MP who did not want to be identified.

Another from Central Kenya added: “We have accepted the deal although it may not be the real deal we were pushing for.”

Gratuity and pension payments at the end of Parliament’s five-year term will also be higher. MPs in the last Parliament took home Sh3.7 million (Sh61,666 a month) as gratuity as well as a pension that worked out to Sh121,600 a month. SRC proposed dropping the pension and raising the gratuity to 31 per cent of basic pay (which earns MPs an extra Sh201,887 a month). Lawmakers have, however, pushed SRC to reinstate their pensions scheme while keeping the enhanced gratuity. This doubles their total retirement benefits from about Sh183,000 under the Tenth Parliament to more than Sh367,000 a month. The plan proposed by the SRC would have capped this at Sh201,887 a month.

“(SRC) has taken into consideration that MPs are on a defined benefit contributory pension scheme and has, therefore, retained the same retirement benefits provision,” read a statement by the salaries commission.

MPs previously contributed 12.6 per cent of their pensionable pay (Sh40,320 a month) and the Government chipped in 25.4 per cent (Sh81,280 a month). Based on similar rates, each member’s monthly contribution of Sh82,057 (five year average) will be topped up by Sh165,163 from the Treasury.

SRC had initially recommended giving MPs a Sh7 million loan, payable at an interest rate of three per cent, to be used to buy new vehicles. Lawmakers, however, successfully fought to get a Sh5 million gift in addition to the loan. The ‘grant’ is higher than the Sh3.3 million given to MPs in the Tenth Parliament and is the first to be given alongside an ‘optional’ car loan. For the 416 MPs — 349 members of the National Assembly and 67 Senators — the car allowances will cost the taxpayer Sh2.08 billion. SRC explained the Sh5 million grant was a more viable option than having the Government provide chauffeur-driven vehicles to all 416 Members of Parliament.

The secret pay deal MPs have secured is even sweeter on sitting allowances for committees. Initially, SRC had recommended that MPs are entitled to Sh5,000 a day subject to a maximum of four days in a week. This limited the maximum a member could pocket from committee.

sittings to Sh80,000 a month. Under the new deal, there is no limit to sittings. Additionally, an MP who attends all four sittings of the House in a week pockets Sh80,000.
Considering each MP is a member of at least two committees, the removal of the cap allows them to make as much money as the number of sittings held. This week, 16 committees were scheduled to sit. Chairpersons and vice chairpersons of committees pocket Sh10,000 and Sh8,000 for each sitting.
Explaining this part of the deal National Assembly Speaker Justin Muturi earlier said: “It is not about the money. The SRC was trying to control the House. Committee sittings, say on Saturday, are subject to a resolution of the House. It must be on necessity, like when we sat at the weekend to vet Cabinet nominees.”

MPs will also reap more cash in enhanced mileage claims. For travelling to their constituencies, each member is entitled to claim a weekly refund of Sh109 per km up to 750km and thereafter 70 per cent or Sh76.30 per km at AA rates. The provision favours representatives of far-flung constituencies like Northern Kenya. The rates are far much better than what was paid out to members of the last Parliament. In 2009, the claims were based on Sh38.70 per km for the first 750km and, thereafter, Sh100 per km. The rates were reviewed towards the end of the tenure of the Tenth Parliament.
Other benefits for MPs include a mortgage scheme of up to Sh20 million repayable at an interest rate of three per cent per year within five years or before end of term. The last Parliament had a Sh15 million low interest mortgage. Parliament will also work out another medical ex gratia payment and notify the SRC. The justification is that some members exhaust the medical cover and there is need to sort out the problem.