KACC finds new retirement plan illegal unless laws are changed

The legal hurdles standing in the way of the new pension scheme for civil servants and teachers have been highlighted in a report by the national anti-corruption agency. The Kenya Anti-Corruption Commission said the scheme, first unsuccessfully introduced in 2006, would be unconstitutional unless certain laws are reviewed.

The government has set July 1,2009 as the date when the Public Service Superannuation Scheme takes effect. But a report by the anti-graft agency handed over to the government last November said the implementation can only be valid after the relevant pension laws have been reviewed.

At the time the report was released, some ministries were deducting contributions for the 2006 Public Service Superannuation Scheme from their employees. “This was being done despite the fact that there was no clear legal framework for the implementation of the scheme,” said the report.

The anti-corruption agency urged the Ministry of Public Service, that of Finance and Attorney General Amos Wako to ensure that all the relevant laws were quickly put in place. The report’s position appears to give credence to concerns by the Kenya National Union of Teachers, which has written to Public Service minister Dalmas Otieno requesting that the laws be reviewed before the scheme can be implemented.

In a letter dated April 2, Knut demanded that the government immediately come up with a draft Bill that will spell out how the new scheme will be implemented and table it for discussion among interest groups. The union warned that any deductions from members’ salaries before a new law was in place would be unconstitutional.

Among the laws the union wants changed are the Pension Act, Pension Increase Act and Widows and Children’s Pension Act.
Others are the Income Tax Act and Retirement Benefits Act. The government has said that teachers, civil servants and members of the police force would join the scheme gradually by contributing portions of their salaries over the next three years, starting in July.

Under rules issued by Public Service Permanent Secretary Titus Ndambuki on March 20, the staff will contribute two per cent of their basic salary to the scheme starting on July 1 and increase the contribution to five per cent a year later. They start contributing the maximum 7.5 per cent in 2011.

On the other hand, the government will start contributing its full share of 15 per cent of each of the members’ contribution from July 1. Mr Ndambuki said workers will have to remain in employment for at least five years to qualify for a share of the government’s contribution. Those who leave before the expiry of this period will only go home with their own contributions, plus any interest accrued.

To qualify for the full benefits, officers will have to serve for at least 10 years. Those who leave after six years will get 60 per cent of the government’s contribution and those with five years’ service will be rewarded with a 50 per cent government contribution. The scheme will be open to officers who are 45 years and below.