NAIROBI, Kenya, Mar 6 – The government on Friday said it had increased the retirement age for public servants by five years and announced a new contributory public service scheme.,
Public Service Minister Dalmas Otieno told a news conference that civil servants will retire after attaining 60 years beginning next month.
“The raising of the retirement age from 55 will reduce the increase of the number of new pensioners, it will give the government time to programme for resources to fund the new pension scheme and allow room for introduction and operationalisation of the (public service) scheme,” he said.
Under the new scheme persons with disabilities will be allowed to work up to the age of 65 years if they so wish.
Early retirement will remain at the age of 50 and other areas like retirement in public interest, medical grounds, from the disciplined services or due to abolition of offices will remain the same.
The Minister said the new contributory public service scheme, which is to kick off in July, will require civil servants to make a monthly contribution of 7.5 percent from their salaries while the government will put in 15 percent.
The contributions which will provide for a 100 percent vesting within 10 years will be paid to a Public Service Superannuation Fund and will operate under the Retirement Benefits Act.
Mr Otieno said the pension will be advantageous to employees since it allows transfer of services without losing benefits.
Public service employees will also be able to access their contributions upon leaving employment and only wait for the government’s contribution at age 65.
The Minister further said that deductions will be increased over three years before hitting the 7.5 percent of pay.
In the first year, public servants will contribute two percent, in the second year five percent and by the third year they will be expected to pay the 7.5 percent.
Mr Otieno noted that the scheme will form the largest pension fund in the country which will obviously boost investment funds as well as make a contribution to the Gross National Savings for Investment.
12,000 employees were expected to retire this year but since the introduction of the new scheme they have another five years to offer their services.
Currently the civil service has about 93,000 employees and 245,000 teachers. Military officers are, however, not included.
The government spends about Sh26 billion on pensions and Mr Otieno said he expected to spend about Sh30 billion under the new scheme.
There are 182,000 retirees getting pensions and 46,000 of them are over 50 years old.