MPs will get a Sh11.6 million send-off package at the end of each five-year term if proposals by Parliament’s pensions management committee are approved.
The committee, through its Parliamentary Pensions (Amendment) Bill, Wednesday tabled proposals that will see the MPs choose between making monthly pension contributions and the Sh11.6m gratuity payable at the end of each term.
Under the proposed gratuity scheme, MPs will be entitled to an equivalent of 31 per cent of their basic pay for the 60-month term without contributing a cent.
Lawmakers who opt to contribute for pension will, however, not get the gratuity but remain in line for a lifelong monthly payout of at least Sh125,000 should they exit after serving for at least two terms.
The one-off payment is yet another reflection of the growing taxpayer burden of keeping top public servants comfortable in retirement.
“Subject to provisions of this Act, a person shall be entitled to gratuity under this section where the person ceases to be a Member of Parliament and has served aggregate period of five years or less,” the Bill, which MPs debated last evening, states.
The proposed law further opens a window for pension-contributing MPs who have served more than one term to elect to be paid gratuity instead of pension at the end of the parliamentary term they are serving at the time.
The new gratuity pay will be calculated at the rate of 31 per cent of an MP’s basic pay, which the Salaries and Remuneration Commission (SRC) fixed at Sh621,250 through a gazette notice in 2017.
This means each MP opting for gratuity will receive Sh11.55 million, being 31 per cent of Sh37, 275, 000 earned over a five-year term.
If the 418-member bi-cameral Parliament, including Speakers of the National Assembly and the Senate elect to be paid gratuity, taxpayers will pick up Sh4.848 billion bill for golden parachute payments.
The proposed law requires MPs to choose at the beginning of their term whether they want gratuity or contributory pension, which will see them part with 12.75 per cent of their monthly salary with the government matching a similar amount.
“If you elect pension and serve two terms, you will be eligible to Sh125,000 going by current basic salary and a lump sum of Sh7 million,” Gladys Wanga, the Finance committee chairperson, said during debate.
The Parliamentary Pensions Act stipulates that only those who serve for two terms are entitled to a Sh125, 000 monthly pension for the rest of their lives. For MPs who lose after serving one term, they are refunded the equivalent of three times their monthly pension deductions plus 15 per cent interest for every year served.
The new law comes after MPs reviewed their retirement benefits law to allow about 375 former legislators who served between 1984 and 2001 to earn Sh100,000 in monthly pensions.
The House yesterday morning passed the Parliamentary Pensions (Amendment) Bill, 2019 to raise pension for MPs who served 17 years ago from the current low of Sh33,000 to above Sh100,000, a move that could pile additional burden to taxpayers if President Kenyatta appends his signature.
On top of pension, MPs are entitled to a Sh7 million tax-free car grant and a mortgage facility of Sh20 million that is repayable at the end of their five-year term.
The PSC also provides MPs with a medical scheme of Sh10 million for inpatient cover per family, Sh300,000 for outpatient, Sh150,000 for maternity and Sh75,000 for dental care.