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Treasury now revives plan to digitise pension claims process

BUSINESS
By Patrick Alushula | Jan 29th 2022 | 2 min read
By Patrick Alushula | January 29th 2022
BUSINESS

CBK's Pension Towers.

The National Treasury has revived a plan to automate submission and processing of pension claims to enable payments to retired civil servants within a month and eliminate backlogs.

Treasury had in February last year advertised the tender for developing an online pension management information system ((PMIS) but the process stalled.

The tender has now been re-advertised, opening the search for a consultant to develop, supply, install and commission the system to replace the web-based one that has been in place for 11 years.

Treasury says it is currently servicing dues of about 300,000 pensioners registered at the department of pensions, leading to challenges such as lost documents, repetitive processes and a backlog of cases not adjudicated and paid.

The current system of handling claims is heavily reliant on movement of voluminous hard copies of pension papers from one office to another, leading to financial and mental suffering for retirees.

Pensioners and their family members have also been making numerous physical visits to various offices to apply and follow up on pension payments, with the situation worse for those who served in various government institutions.

“The above challenges have over the years adversely affected some critical functionality of the PMIS and the speed of processing pension awards,” says Treasury.

“This, therefore, prompted the necessity to procure a modern pensions system that is customer-centric, flexible and accessible at the customer convenience and more user friendly.”

The department of pensions at the Treasury receives an average of 20,000 new claims annually, leading to faster accumulation of claims compared to payments.

Treasury expects the new system to offer round-the-clock capability of allowing applicants to digitally apply for pension payment and receiving auto-alerts on the progress of the process.

It plans to spend Sh146 billion towards pension in the financial year starting June. The amount was Sh27.7 billion eight years ago.

Kenya in January last year introduced the Public Service Superannuation Scheme where all civil servants are now making monthly contributions for their pension to tame the bulging pension bill.

The State had as far back as 2008 tried to transition from a non-contributory scheme to a contributory one until 2020 when Treasury gazetted the change.

Last year, Treasury showed civil servants will be contributing about Sh2.6 billion monthly to the fund, making it Kenya’s largest pension scheme.

NCBA, Stanbic and Co-operative banks last year bagged the contract to become custodians of the more than Sh31.2 billion in annual pension contributions by public servants.

The three banks will carry out the custodial services for three years, which will be renewable on expiry by mutual agreement for a further period of three years depending on performance.

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