Treasury and SRC clash over Pension Bill amid cost of living debate

The National Treasury and the Salaries and Remuneration Commission (SRC) are embroiled in a contentious debate over proposed amendments to the Pensions Act, Cap 190, specifically regarding automatic cost-of-living adjustments for retired public servants.

The Pensions (Amendment) Bill, 2024, introduced by Matuga MP Kassim Tandaza, aims to base pension calculations on the most current salary applicable to a job group or its equivalent.

During a recent session before the National Assembly's Departmental Committee on Finance and National Planning, Treasury officials vehemently opposed the bill, citing potential fiscal strain on the Exchequer, particularly during periods of high inflation.

Director of Pensions, Michael Kagika, speaking on behalf of Treasury Principal Secretary Chris Kiptoo, expressed concerns that the proposed changes could disrupt budgetary planning and jeopardise funding for essential public services.

Contrarily, the SRC has thrown its weight behind the amendments, highlighting existing disparities in pension payments under the current system.

The commission argues that using current salary levels as the basis for pension calculations would rectify discrepancies and ensure fairer retirement benefits for all eligible public servants.

Kagika emphasised the necessity for an actuarial valuation to assess the long-term financial sustainability of implementing automatic cost-of-living adjustments.

He disclosed that the Pensions Department is currently undergoing such a valuation, with results expected by mid-April.

This valuation will serve as a critical factor in determining the feasibility of adjusting pension benefits amidst an aging population and increasing life expectancy.

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