Taxpayers to fund Sh3.2b send-off perks for lawmakers

Taxpayers could pay at least Sh3.2 billion in gratuity to MPs and senators. [iStockphoto]

"If after receiving gratuity under Subsection (2) the member elects to pay pension contributions under Section 4, the member may, if he so desires, repay all the gratuity paid plus interest at the rate of three per cent per month and pay the contributions under Section 4 for the entire period of non-contribution to match up with existing contributors," states the Bill.

This means sitting MPs can claim gratuities and also remain eligible to receive pensions and chose whether or not to refund the gratuities they received for past terms.

This is the third attempt to introduce gratuity payments for first-time MPs after President Uhuru Kenyatta last year declined to assent to the Parliamentary Pensions (Amendment) Bill, 2019 following public outcry over the wage bill. Giving submissions on the Bill in 2020, Treasury said while presenting MPs with the option of a gratuity or a pension was convenient, the decision should be irrevocable to prevent doubling the send-off package for lawmakers.

"The net effect of the amendment will be that the government meets the full cost of contributions since members will not have contributed towards the funding of their pension," said the National Treasury in submissions to Parliament's Departmental Committee on Finance and National Planning.

"This translates into receiving both service gratuity and a pension thus overburdening the taxpayer. In such a case, the member should refund the gratuity and make contributions for the entire period of non-contribution."

This recommendation was adopted by the Departmental Committee, which set the refund of gratuity as a condition for rejoining the parliamentary pension scheme.

"The committee agreed with the comments by the National Treasury on clause 8, which touches on subsection 7 (5) and, therefore, resolved to propose a deletion of the amendment," said Parliament's Departmental Committee on Finance and National Planning in its report.

"This implies that if a member during his/her first term elected to be paid gratuity and then during the second term he or she elects to be pensionable, he or she will be required to refund the gratuity paid with interest and then make contributions for the months he or she had not contributed," said the report.