Proposed pension changes spark rift between Treasury and SRC
A debate over proposed changes to pension calculations for retired public servants has sparked sharp divisions between the National Treasury and the Salaries and Remuneration Commission (SRC).
The Pensions (Amendment) Bill, 2024, introduced by Matuga MP Kasim Tandaza, seeks to adjust pensions based on the most recent salary applicable to a job group or its equivalent, a move that has drawn contrasting reactions from key stakeholders.
During a session before the National Assembly’s Finance and National Planning Committee, Treasury officials strongly opposed the proposal, warning that it could place a heavy financial burden on the Exchequer, especially during times of economic instability.
Speaking on behalf of Treasury Principal Secretary Chris Kiptoo, Director of Pensions Michael Kagika cautioned that the proposed amendments could disrupt budgetary planning and affect the government’s ability to fund critical services.
“The financial implications of this bill must be carefully considered. Implementing automatic cost-of-living adjustments without a thorough actuarial assessment could strain government resources and undermine fiscal stability,” Kagika told the committee.
On the other hand, the SRC has backed the proposed amendments, arguing that the current pension system has created disparities in retirement benefits.
The commission believes that aligning pensions with present salary scales would correct these imbalances and provide retirees with fairer compensation.
The discussion has brought to light the longstanding tension between maintaining fiscal responsibility and ensuring equitable pension benefits for retired public servants.
Kagika stressed that an actuarial valuation is already underway to determine the long-term financial sustainability of automatic adjustments.
The results of this assessment, expected by mid-April, will be instrumental in deciding whether the proposal can be implemented without jeopardizing the government’s financial obligations.
