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Blow to MPs as SRC rejects proposed Parliamentary pension law
Parliament in session on November 9, 2023.
What you need to know:
- The Parliamentary Pensions (Amendment) Bill proposes that an MP who has served for more than one term of parliament may elect to be paid a gratuity “in lieu” of a pension at the end of the term of parliament “which the member is at the time serving.”
- It goes on to say that if after receiving gratuity, the member chooses to pay pension contributions, he will be required to repay all the gratuity paid to them plus interest at the rate of 3 percent per month for 15 months from the date they elect to be pensionable.
The Salaries and Remuneration Commission (SRC) has rejected a proposed law that seeks to make MPs who have served in parliament for less than 10 years eligible for payment of a pension and limit gratuity to those who have served for five years or less.
In a memorandum to the National Assembly, SRC says that the Parliamentary Pensions (Amendment) Bill 2023, is not only illegal but unconstitutional.
SRC Chief Executive Officer Ms Anne Gitau warned parliament that pension is an employment benefit and therefore falls within the mandate of SRC and that “any legislative proposal or review thereof is subject to the mandate of SRC as provided for in the constitution.”
“The Bill infringes SRC’s mandate. In view of the foregoing, SRC is of the considered view that the proposal to review the pension benefits for state officers in parliament is in contravention of the constitution and therefore unconstitutional,” says Ms Gitau.
Article 230 (4) (a) of the constitution mandates SRC as the only state agency with the powers to set and regularly review remuneration and benefits payable to all state officers and public officers.
Clause 8 of the Bill seeks to delete section 7 of the Parliamentary Pensions Act and substitute it with “a person shall be entitled to receive gratuity where a person ceases to be an MP and has served an aggregate period of five years or less.”
The Bill also proposes that an MP who has served for more than one term of parliament may elect to be paid a gratuity “in lieu” of a pension at the end of the term of parliament “which the member is at the time serving.”
The proposed law goes on to say that if after receiving gratuity, the member chooses to pay pension contributions, he will be required to repay all the gratuity paid to them plus interest at the rate of 3 percent per month for 15 months from the date they elect to be pensionable.
However, SRC notes that this proposal creates the impression that only MPs who have served an aggregate of five years or less are eligible for payment of gratuity and those who have done anything less than 10 years are eligible for pension.
Instead, SRC wants the clause deleted from the Bill in favour of a proposal that will allow only MPs who have previously served for at least one term elect to be paid either a pension or a gratuity.
Currently, only MPs who serve for at least two terms are eligible for a lump sum of Sh7 million before tax of 30 percent and a monthly pension of Sh118,000.
Those who have served less than ten years are eligible for a service gratuity at the rate of 31 percent of their basic pay and a refund of their contribution plus the 60 percent worth of government contribution.
Parliament in session on November 9, 2023.
In the last parliament, the Parliamentary Service Commission (PSC) had on January 31, 2019, requested SRC to review the remuneration and benefits for state officers serving in parliament.
But on March 13, 2019, SRC set that MPs who serve one term in parliament and are not re-elected shall only be entitled to a service gratuity at the rate of 31 percent of their monthly basic pay at the end of their term as well as a refund of their contributions without interest.
SRC further states that no state officer should benefit from pension and gratuity benefits from the same public employer for a similar period.
“Any public institution that desires to have remuneration and benefits of its state officers including pension reviewed, is required to submit in writing to SRC as required by the constitution, providing among others, justification for the request and confirmation of availability of funds for the proposed review,” says Ms Gitau.
Pension in government is a contributory affair between the employee and the employer.
In this case, each MP is required to contribute Sh45,000 every month while the government, through the PSC, which is the MPs’ employer, contributes double the amount for MPs who have served in parliament for at least two terms of five years each.