Why Kenya wants fingerprints of British pensioners
Kenya’s Parliament is demanding biometric data of British and Asian colonial civil servants, who continue to draw pensions in the country. The National Assembly says the Asians and Europeans, who retired from the colonial government to pave the way for Africans, were born in the 1930s. There is, therefore, every reason that Kenya should see their pension bill reducing.
Instead, their allocations had grown from Kes100 million to Kes150 million in 2022 up to 2026. This is implying that ‘no natural attrition’ will occur over the next three years.
The colonial civil servants collect their pension through Crown Agents, a British firm that recently moved its strategic offices to Kenya. The company seeks to coordinate philanthropic services including repatriation of stolen funds from Jersey into the Kenyan health sector.
Kenya is interrogating every item on its pension register as the country faces cash shortages that are delaying remittance of funds to its own older citizens.
“The National Treasury should authenticate the existence of European and Asian pensioners who retired due to Africanization of the public sector after independence in 1963 who are paid through the Crown Agents Organisation of the UK,” the Public debt and Privatisation committee said.
“The process of authentications should be based on information backed by a biometric process and undertaken annually prior to the first payments.”
Counties delaying pension commitments
Kenya’s pension commitments surged by 142 percent over the last five years from Kes63.1 billion to Kes152.9 billion, causing a pension crisis for civil servants.
Currently, both the National and County governments are delaying their pension commitments. The unfortunate turn of events comes at a time when older citizens need their savings for medical expenses and upkeep.
The delays risk forcing older citizens to seek work to meet their bills, or increasing dependency on their working children. The challenge is also seeing them sell assets to survive. This is an unfortunate outcome for workers who diligently put away their money during their working years.
“Due to liquidity constrains, some cash calls ups for Treasury bonds and disbursement of funds towards pension expenditure (monthly and lumpsum) have not been funded in time. The delay in disbursement of pensions and gratuities was noted as a recipe for social economic predicament for senior citizens,” the Public debt and Privatisation committee said.
There is a growing pension crisis brewing in the country. Already, the National government has failed remitting Kes7.8 billion as of June 2022 for the new superannuation pension scheme. This is the scheme MPs are blaming for blowing up the pension budget.
Kenya moved civil servants from defined pension benefits to a contributory scheme as part of reforms to get multilateral loans. In the plan, civil servants contribute 7.5 per cent of their pay while the government matches with 15 percent. However, the state now seems unable to sustain this, signaling the challenge of reforms in repairing Kenya’s deteriorating fiscal position.
Read also: Treasury turns to KRA as counties pocket pensioners’ savings
Kenya’s pension expenditure
Parliament now says the new scheme blew pension expenditure by Kes20.8 billion in 2022. What’s more, it will require a further 31.9 billion this year. “Despite being critical, the timing of its introduction should have been considered as the scheme has bene introduced during a period of fiscal constrains while the benefits are estimated to occur 12 to 15 years from today,” the committee said.
Pension funds such as CPF have began pushing government to pay them directly before disbursing money to counties. This strategy will result in lower county disbursements as the debt is paid, escalating cash crunch in the counties.
While the National Government grapples with delays paying older citizens, it has a solution for the counties. Already, the government is asking the Kenya Revenue Authority to collect pension dues from counties.
Counties have not paid Kes85.05 billion to various pension schemes and institutions, Controller of Budget Margaret Nyakang’o has said. Nyakang’o said that the Local Authorities Provident Fund is demanding Kes48.79 billion. At the same time, Local Authorities Pension Trust Fund wants Kes32.95 billion. A further Kes3.91 billion needs to go to Counties Pension Fund as per March 31, 2023.
Pension crisis will have a lasting impact in Kenya not only on senior citizens but also the motivation on younger generation to save if they cannot access the money in old age.
Pension challenges and subsequent reforms in France has borne the Western Nation its largest political crisis as unions and citizens rallied and rioted for months. This shows Kenya’s already fragile economy is risking further agitation if government does not fix the challenges soon.
