Taxpayers face Sh3.1 billion Bill for proposed MCA pension scheme

Taxpayers may soon be required to contribute at least Sh3.11 billion to fund a proposed pension scheme for Members of County Assemblies (MCAs), following the introduction of the County Assemblies Pensions Scheme Bill, 2024.

The Bill sponsored by Senate Majority Leader Aaron Cheruiyot, currently before the Senate, seeks to establish a state-sponsored pension fund that will provide retirement benefits for ward representatives across Kenya.

Under the proposed scheme, both the county assembly public service boards (CAPSB) and individual MCAs will make contributions.

The CAPSB, which is funded by taxpayers, will contribute 15 per cent of the MCAs' pensionable emoluments, while the MCAs themselves will contribute 7.5 per cent.

“Every sponsor shall contribute to the Scheme not less than 15 per cent of the pensionable emoluments of a member of the scheme plus the amounts necessary to cover the premiums for the insured benefit,” the Bill reads.

The sponsor, as defined in the Bill, is the MCAs' employer, the County Assembly Public Service Boards (CAPSB).

In addition to the pension contributions, the sponsor will also be required to maintain a life insurance policy with disability benefits for each MCA, with coverage amounting to three times the member’s annual pensionable emoluments.

Currently, an average MCA earns a salary of Sh154,481, which includes a basic salary of Sh92,689, a house allowance of Sh50,000, and an official commuter allowance, along with a salary market adjustment of Sh11,792.

This salary is exclusive of the sitting allowance, which is capped at Sh124,000 per month.

With a total salary of Sh154,481, it is estimated that the CAPSBs will contribute approximately Sh51.86 million per month for the 2,238 MCAs across the country.

This amounts to Sh622.31 million annually or a total of Sh3.11 billion every five years.

Senator Cheruiyot in his Bill stresses the importance of the scheme in ensuring that MCAs are provided for after retirement.

Retirement benefits

He noted that many former councillors have long lamented their lack of retirement benefits, despite having served the country.

“When you meet many of our former councillors, they keep on calling us and saying that they did their bit to serve the country. They tried whatever they could to make this station a better place but unfortunately, they were left out in the cold,” Cheruiyot said.

Currently, retired MCAs receive gratuity based on 31 per cent of their basic salary for each term served.

The new Bill aims to improve upon this by offering more comprehensive benefits, including lump sum payments, periodic pensions, and income drawdowns for retired or resigned MCAs. If an MCA passes away, their spouse or children will be entitled to the pension benefits.

The Bill also proposes that all current members of county assemblies and staff automatically join the new pension scheme once the Act comes into effect.

It further provides that the scheme will be open to other public officers and anyone approved by the scheme’s board, offering a universal framework for county government employees.

“The proposed scheme will transition all members of county assemblies into one universal scheme for all the 47 county governments besides being open to other public officers and any other person approved by the board,” the Bill reads further.