We benefit more with pensioners who are financially independent

NAIROBI: An obscure article appeared recently in one daily newspaper indicating that the Kenya National Union of Teachers (KNUT) had given the Teachers Service Commission (TSC) a 30-day ultimatum to pay retired teachers Sh42.3 billion worth of pension money owed to them since 1997. The 52,000 teachers affected in this financial injustice are not alone. Many pensioners suffer without being heard; even former Vice Presidents!

The politics of “pension injustice” has been thriving in Kenya for a long time. It flourishes under the auspices of a much bigger captain of injustice; impunity. I remember in the Seventh Parliament when I was chairman of the Public Investments Committee coming across the case of the then Kenya Posts and Telecommunications Corporation (KPTC) raiding the pension fund of its workers on the eve of its privatisation. The workers went home without a secure future. The management of KPTC did not only get absorbed into the new outfits that were born after privatisation but were obviously smiling all the way to the bank with workers’ pensions in their pockets.

The case of the Kenya Railways and Harbours Corporation was no better. Railway workers who had made wealth for our nation for decades and decades were not only denied the chance to buy the houses they were living in but their voices were completely silenced when they asked for their pensions. To this very day none of them has received their pensions!

The word “pension” has become a bitter sweet to swallow in the mouths of retirees. Even when it is available it is pittance. Not only is it very little from the word go but it dwindles to nothingness as years go by? Why? Because of inflation and the systematic depreciation of the shilling. In 1996 I met a former Permanent Secretary who later served as an ambassador in Washington for close to five years. He told me his pension was Sh4,000 per month. That amount has not been varied to this very day. It literally means that his pension is US$ 40 per month. I wonder what he would do with that as an old man of 80 years with enormous health problems to contend with.

Recently the government introduced some support for senior citizens over 60 who can prove that “they deserve financial support from the state because of poverty.” Not a bad idea. What is proving to be an enormous problem is the choice of who is poor and who is not. Given the extreme degree of dependence that prevails in our rural areas, most senior citizens need state financial subsidy, especially when the pension system does not work effectively. Interestingly enough a good number of senior citizens who have been able to access this financial support receive not more than Sh5,000 per month. In effect this old people’s fund is no more than a palliative; it can only work effectively if our pension and health insurance regimes worked fairly and effectively.

So where does that leave us? Let me suggest the following.

First, let us adopt a national ethos which views our senior citizens not as a bother but as an asset. The teachers case illustrate this very well. Although it is clear that the Teachers Service Commission was wrong to deny the teachers their pensions for 17 good years, a decision by the Supreme Court urging the TSC to pay the outstanding bill seems to meet with little urgency. And 1997 is a long time. Obviously some of the beneficiaries could have died. It is upon the government—which is the registrar of births and deaths—and the TSC, which is the paymaster, to get together and establish sound records on which to disburse the pension funds to the teachers. It is a shame that teachers had to come from all parts of Kenya to congregate in Nakuru to design a method of “putting their pension papers together”. Why do we pay taxes to our government? To make decisions on the basis of the sound records it keeps or on the basis of data held by single citizens across the nation? Let me assure the TSC that money put in the hands of the pensioners will add more to the growth of our GDP than when the government keeps it and wastes it on Eurobonds.

Second, a proper administration of our pension schemes will also ensure much better investment decisions by individuals while still working. Because of poorly managed pension systems, individuals tend to “organise their own pensioning schemes.” This, by the way, is one of the causes of corruption in our country. An individual who sees his future bleak after retirement may be very tempted “to put some money aside” where he or she works “for a rainy day tomorrow.” I don’t mean to imply that this is the sole cause of corruption. Not at all. But obviously it does play a role in nurturing the culture of corruption in our country.

Finally, a close reading of our Constitution reveals that we have an obligation to look after our senior citizens. This should not be interpreted in a paternalistic manner. What it means is that we are obligated to create an environment where our senior citizens must live a liveble life “as if they were still at work.” Many senior citizens who are well pensioned could easily end up being new entrepreneurs, new creators of jobs, new openers of frontiers of innovation and discovery. Let us not, therefore, exile them into poverty by not giving them the means to continue being productive; their pensions.

Some will perhaps argue that we need to pay more attention creating jobs for the youth rather than spending money on those “who have had their turn at working”.  But just remember one painful fact. That retiree without pension may have to be looked after by his son or daughter who is working. In effect the son or daughter will be diverting money that could be used for investing in shares in the stock market to home consumption. In effect, by denying our senior citizens their pensions, we are simply being penny wise and pounds foolish. In order to avoid this rather absurd economics, let us chew gum and walk at the same time. Let us establish an economic transformation project that tackles the jobs and pensions as interdependent issues. None is less or more important than the other.