MP wants workers retired at 50, not 60

Kenya is staring at a major pension crisis should a proposed amendment intending to slash the retirement age by 10 years become law.

Increasingly struggling to keep up with the soaring Pension Bill, a decision was taken in 2009 to allow public workers to stay on for five more years, raising the retirement age from 55 to 60.

Already, the country’s public sector pension burden has overburdened the taxpayer through the annual bill that is projected to cross the Sh110 billion mark this year.

Among the reasons the pension bill has ballooned are salary increments enjoyed by Government workers since the turn of the millennium. Retirement benefits are pegged on salaries.

Reducing the retirement age to 50 years would immediately send a third of Government workers home, making them eligible to earn a lump sum payout.

Afterwards, the retirees are also paid a monthly allowance that is a fraction of their final salaries until death and a further five-year disbursement to their dependents.

Most public sector workers are nearing retirement after the State froze new hiring, locking out younger staff.

Early retirement

Even before the amendments on early retirement are considered, an estimated 20,000 public officers are expected to retire this year, while another 40,000 have already left service but are yet to receive benefits.

Going by the large number of workers who have attained the age 50 the pension bill immediately payable would be unsustainable.

So big a concern has the public pension bill been that the State has considered hiring workers on contract instead of permanent and pensionable terms.

Unveiling the proposal to change the employment terms, Stephen Kirogo, the chairman of the Public Service Commission, said this was the right thing to do to address the soaring bill in future.

Charles Jaguar Kanyi, the proponent of the amendment to reduce the retirement age to 50, believes the proposal will help create employment opportunities for college leavers.

While it might be too early to gauge whether fellow parliamentarians will agree with him, the proposal might gain traction, considering that youth unemployment rate is a big concern for the political class.

It, however, could only have an impact on the first year as the number of retirees leaving service in the subsequent years would not be significant.