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SRC rejects legislators' post-retirement medical scheme
Ms Lyn Mengich Chairperson of the Salaries and Remuneration.
The Salaries Remuneration Commission (SRC) has rejected a proposed law to establish a post-retirement medical scheme for MPs to be administered by the Parliamentary Service Commission (PSC), saying it is unconstitutional.
In a memorandum to the National Assembly, the SRC faulted the provision in the Parliamentary Pensions (Amendment) Bill 2023, which also proposes payment of a full year's salary to legal representatives of MPs who die before serving 12 months.
The Bill by Kitui Central MP Makali Mulu, which is currently before Parliament, seeks to give PSC, the employer of MPs, the power to establish a "voluntary" post-retirement medical scheme for MPs.
In doing so, the Bill gives the PSC the power to determine through regulations the minimum and maximum amount that an MP can contribute to the post-retirement scheme, with the government matching the contributions.
“This proposed section contravenes the mandate of SRC as granted by the constitution,” SRC Chief Executive Officer Ms Anne Gitau says in the memo.
Enjoy medical coverage
Article 230(4)(a) of the Constitution gives the SRC the mandate to determine and periodically review the remuneration and benefits of all state officials, including MPs.
“A post-retirement medical scheme is therefore a benefit within the meaning of Article 230 (4) of the constitution,” Ms Gitau adds.
The 10-member PSC is chaired by the Speaker of the National Assembly with the Clerk of the Senate as the secretary.
Currently, members of the National Assembly and Senate, their spouses and children under the age of 25 enjoy medical coverage provided as a taxpayer benefit and administered by the PSC.
In 2021, the National Assembly, through the Finance Act of 2021, amended the Retirement Benefits Act (RBA) to allow pension schemes to establish stand-alone pot retirement medical schemes for employees in the public service, including state officers.
The Bill therefore seeks to align the Parliamentary Pensions Act with the RBA Act to allow MPs to make contributions while in service and use the savings to meet their medical expenses in retirement.
Currently, post-retirement medical schemes governed by the Post-retirement Medical Funds Regulations are voluntary and contributors cannot access their contributions while still in service.
However, the regulations prohibit the establishment of individual medical funds without the approval of the Retirement Benefits Authority (RBA).
Individual medical fund
“No person shall establish an individual medical fund without prior registration and approval by the authority and in accordance with these regulations,” the rules state.
The SRC memo also notes that the Bill's proposal to give the PSC the power to make regulations for the establishment, regulation and supervision of the management of the post-retirement medical fund scheme for MPs be scrapped from the Bill.
Instead, the salaries commission wants the PSC to "submit a proposal on this benefit for consideration".
Further, clause 11 (b) of the Bill seeks to amend Section 11 (a) of the principal Act to enhance the amount paid to legal representatives of deceased MPs whose aggregate period of service is less than 12 months "to an amount equal to the annual salary of the deceased MP".
SRC notes that this proposal is not only inconsistent with the memorandum and objectives of the Bill, but also represents an added cost to the scheme as MPs' contributions will not be enhanced to cover the added cost," the memo said.
The SRC also notes that the proposed change is already well catered for, as MPs are entitled to Group Life Insurance, which is funded by the taxpayer.
As per the SRC gazette notice dated July 28, 2022, an MP takes home a monthly salary of Sh710,000, which includes a basic pay of Sh426,000, a house allowance of Sh150,000 and a salary adjustment of Sh134,000, and is fixed for an MP's term of office "unless reviewed and set by the SRC".
The monthly remuneration follows a reviewed job evaluation of an MP plus compensation for plenary sitting.
On top of the basic pay, an MP is also entitled to a committee sitting allowance, and mileage claims among others, at rates recommended by the SRC.