The National Treasury has further delayed pension payments to retirees with no amount released to former public servants for July.
Official disclosures show that the Exchequer did not make any cash releases for pensions in the first month of the financial year that ends next June out of the Sh223.15 billion allocated.
The unpaid pension adds to the woes of retirees given that they did not receive some Sh23.78 billion allocated to them in the financial year that ended in June.
Mounting debt coupled with missed revenue targets have choked the Exchequer, squeezing its ability to make timely pension payments. The delays spell doom for the 259,222 pensioners and their 83,615 dependents who largely rely on the pension to foot daily bills and other expenses.
Parliament has since flagged the National Treasury in the wake of persistent delays, citing the critical role of more reforms to manage ballooning pension obligations.
Pension payments are priority items on the Consolidated Fund Services (CFS) after public debt but mounting loan repayments and missed revenue collections have pushed Treasury to delay the payments.
“The increase in CFS expenditures is attributed to increase in pension expenditures only and underscores the importance of policy measures aimed at pension reforms and efficient resources allocation to manage the fiscal pressures stemming from rising pension payments,” the Public Debt Committee of Parliament said last month.
The allocation for pension payments in the current financial year is an increase of Sh23.78 billion, a jump from the Sh32.4 billion spent a decade ago.
Increased constraints in meeting pension payments prompted a shift where public servants now contribute to their pension, mirroring their counterparts in the private sector.
State employees have since 2021 been contributing to their pension in a move meant to ease pressure on the Exchequer, through the Public Service Superannuation Scheme.
Under the scheme, government workers contributed two per cent of their gross pay, a rate that was increased to five per cent in 2022 and then 7.5 per cent from last year.
The pension bill is set to grow sharply in the next five years following President William Ruto’s directive that public servants must retire with immediate effect upon attainment of 60 years.
Some 4,547 public servants were aged above 60 as of June last year and a further 25,879 were between 56 and 60 years.
