ADVERTISEMENT

Kenya Estimates Public Pension Spending to Rise 15% Annually

Kenya Estimates Public Pension Spending to Rise 15% Annually

(Bloomberg) -- Kenyan authorities estimate the East African nation’s public pensions payouts will increase by 15% each year to more than 100 billion shillings ($960.8 million) by 2030 “if not funded.”

Pension expenditure increased to 63.1 billion shillings in 2017-18, compared with 25.2 billion shillings a decade earlier, agencies including the National Treasury said Thursday in a statement published in the Daily Nation newspaper.

The state operates a defined benefits pension plan through which it guarantees payouts to its employees after their retirement. The staff don’t make contributions for their pensions and the government also doesn’t set aside adequate money for the workers while they are still employed.

“These rapid increases in government pension costs point at unsustainability in the near future,” according to the statement. “There is need for a new model, policy and legislation including new legislative framework for pensions financing.”

READ: Kenya Plans to Double Pension Assets in Five Years

Under a 100-day plan known as rapid results initiative, the pensions department intends to process 40,000 claims by retired teachers and other public servants, some dating back to 2014. The department maintains a payroll of 290,828 pensioners and processes about 100 claims daily.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net

To contact the editors responsible for this story: David Malingha at dmalingha@bloomberg.net, Helen Nyambura, Jacqueline Mackenzie

©2019 Bloomberg L.P.