Taxpayers may have to pay Sh1bn yearly to exit MPs

To pay or not to pay former MPs a $1,000 (Sh90,000) monthly pension is the big question.

The former MPs want to be referred to as “exit” workers because like politicians around the world, they hardly ever retire ––until they lose an election.

First, the MPs want taxpayers to fund the pension scheme, which is not the case elsewhere where exit MPs enjoy benefits.

In most countries – across Europe, the United States, South America, Asia and most of Africa – pension plans for legislators are either contributory or a lump sum package, otherwise called a golden handshake in Kenya. Legislative pension plans do not exist in 18 countries, while other nations have not even contemplated pensioning off politicians who are beaten at elections.

In fact, in 39 countries including Britain, the US and most of Europe, MPs contribute to their own pensions through an array of schemes — the equivalent of Kenya’s NSSF, superannuation fund, gratuity and civil service retirement schemes.

A decision to establish a pension scheme for exit MPs funded solely from the Treasury has serious implications.

It could lead to the taxpayer alone meeting the cost of approximately Sh1 billion a year for the exiting legislators without any input at all from them as is the case elsewhere. And this would be in addition to increasing the pay perks of sitting MPs to Sh1.1 million a month from Sh880,000.

If the payment plan is implemented, there would be winners and big losers among the exit MPs. For instance, former Electoral Commission Chairman Samuel Kivuitu, former VP Moody Awori, and former MP Nicholas Biwott (Kerio South) would be among the lucky ones since they were in Parliament in 1984, the magical cut-off year.

The big losers would include old men like Daniel Otiende, 93, and Ngala Mwendwa, 88, who even served in the first Cabinet but left before that date and never returned.

Neither would Mrs Grace Onyango, the first woman mayor and the first elected MP in Kisumu Town, benefit.

Parliament last Wednesday set in motion the legal process under which MPs who have served one term from 1984 would be entitled to the pension. The House did this by adopting a report of the Budget Committee headed by Maragua MP Elias Mbau that seeks to implement one of the recommendations of a task force led by Justice (rtd) Majid Cockar on the remuneration of MPs.

“Though it has been adopted, there is still the hurdle of amending the Act to become law,” National Assembly Clerk Patrick Gichohi said.

Unless the MPs go ahead with the anticipated revision of the law and incorporate trends from elsewhere where MPs contribute or subscribe to gratuity law, or even press for a one-off handshake, they will be sure to face resistance from the public.

A little mathematics will suffice. Between 1984 and 2007, there have been six Parliaments. If one were to assume an average of 100 MPs have exited every term – the number could be higher for those who were there in 1984 – the Treasury would have to allocate Sh9 million a month or Sh108m a year for every single Parliament.

The total for six parliaments would be Sh648 million – again assuming 100 MPs exit each of the six parliaments after every election.
Since the numbers become bigger as time progresses, the average 100 exiting MPs grows as years go by – meaning that the Treasury would have to allocate an average of Sh1 billion a year for the pensions.

This calculation is supported by a cursory scrutiny of MPs who were in Parliament in 1984. Of a total of 169 (158 elected and 11 nominated), there are 61 reported deaths; meaning that the 108 who are still alive would benefit when this is implemented.

Since retired President Moi and the soon-to-retire President Kibaki have served as MPs, would they receive the Sh90,000 monthly pension––in addition to their presidential packages?

“They will not be paid from the kitty since they have a retirement package law from where they draw their benefits,” Mr Gichohi said.
And for those who served prior to 1984, Mr Gichohi explained they had a different scheme, gratuity, which was calculated and paid to them recently.

The only persons in the House who do not have a retirement benefits package, he said, are past vice-presidents, speakers and the prime minister who, by extension, could also be lumped together with exit MPs.

Of 10 VPs since independence, four – Jaramogi Oginga Odinga, Joseph Murumbi, Dr Josephat Karanja and Michael Wamalwa – have since died.

Four, excluding Mr Moi and Mr Kibaki, will be looking for accommodation in the pension scheme that would differentiate them from other MPs. They are Internal Security minister George Saitoti, Deputy Prime Minister Musalia Mudavadi, Mr Awori and the incumbent VP Kalonzo Musyoka.

There is only one former speaker, Francis ole Kaparo, and the current Speaker Kenneth Marende while there would be only one Prime Minister Raila Odinga – apart from founding President Jomo Kenyatta who served as PM at independence.

Public hostility

In the event that MPs pass a law granting them a retirement package, they would be less a burden on taxpayers than the exit MPs.

Former Subukia MP Koigi wa Wamwere sees public hostility to anything concerning MPs’ remuneration as linked to their performance during their tenure.

“First, I declare my interest in the pension, since society should also look after their lawmakers in old age,” he said, adding: “The only wrong thing about our society is the welfare system which ought to be designed to cover all Kenyans in old age so that they stop asking, ‘why MPs and not us’?”

His counterpart, former Kilifi Central MP Joe Khamisi, is opposed to payment of pension to exit MPs.

“Law makers are supposed to be servants of the public, and I am still opposed to it in the same way I opposed pay increase when I was there,” he says.

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In other countries, legislators contribute to their pension schemes

BY EMMAN OMARI

British MPs have a contributory pension scheme of which they choose what percentage of their salary should be deducted every month. It is normally 10 per cent, but some MPs choose a higher rate so as to accrue higher amounts at the time of exit.

The state also makes a contribution in the same way local companies do monthly contributions for their employees. Theirs is handled the same way the Retirement Benefits Authority handles Kenya’s benefits with firms.

However, they are also paid “severance or resettlement” grant equivalent to a year’s salary to enable them adjust to ordinary life.

This has continued to elicit public outcry among the British who argue that it was being administered in secrecy yet it was taxpayers’ money.

The exit numbers in the House of Commons at every election are pretty high. For instance, in the 2010 election, 149 did not contest and 76 lost elections bringing to 225 out of 662 MPs – meaning a heavy burden for the taxpayer.

MPs in the US Congress operate from a philosophy of one of the founding fathers, Benjamin Franklin, who had considered proposing during the Philadelphia constitutional making that elected leaders should not be paid for their services to the state.

Hence they also operate a contributory pension scheme in which they are deducted 1.3 per cent to the Federal Employees’ retirement system. A further 6.3 per cent is paid to the Social Security Tax bringing it to 7.5 per cent.

Upon exit, the pension is calculated in complicated formulae according to biological age and the number of years served. The longer the service and age the higher the amounts.

Japan, Australia, New Zealand, South Africa, Ghana and Nigeria lawmakers have all contributory pension schemes for their MPs with varying ages of qualification.