This judgement follows a petition that had been filed by the Council of Governors (COG) against the (SRC), at the Milimani Law Courts in Nairobi.
Governors and their deputies seeking a defined benefit pension scheme similar to one enjoyed by state officers at the national government level upon retirement will not get to do so following a High Court ruling that deemed them not entitled to the benefits.
In a statement on Wednesday, July 31 by the Salaries and Remuneration Commission (SRC), the proposed pension scheme was deemed unaffordable and fiscally unsustainable.
This judgement follows a petition that had been filed by the Council of Governors (COG) against the SRC, at the Milimani Law Courts in Nairobi.
The Milimani Law Courts in Nairobi. /FILE
“The proposed Defined Benefit Pension Scheme for governors and deputy governors is neither affordable nor fiscally sustainable. If implemented, the proposed scheme would have had a ripple effect on all state officers at both the national and county government levels, leaving little resources for development and service delivery.
“Further, the proposed scheme for governors and deputies governors would have been burdensome to the successor governments and generations that must bear the burden of underwriting the cost of a lifetime benefit when the option of gratuity already provides adequate social security,” read part of the statement by the SRC.
The commission further noted that it is not automatic that each state officer must be treated in the same way regarding retirement benefits. This is despite the governors and their deputies being state officers themselves.
“There are peculiarities of the positions, and constitutional and statutory principles that guide such benefits, as determined by SRC under Article 230 of the Constitution of Kenya, 2010, and SRC Act, 2011.
“Therefore, SRC avers that governors and deputy governors are paid a service gratuity at the end of their terms at the rate of 31 percent of annual basic pay for every year served,” SRC stated.
However, the commission said that there was an additional option for governors and deputy governors to join a direct contributory pension scheme if they wished.
The defined benefit pension plan provides retirement payments based on a formula considering the length of service and the annual basic salary at retirement.
This came after SRC froze the upward salary review for all state officers following consultations with the National Treasury.
Addressing the press on Wednesday, July 3, Commission chairperson Lyn Mengich termed the recent budget cuts and the current economic situation in the country as the reasons for the decision.
Furthermore, the SRC boss noted that whatever was frozen would have been implemented in the current financial year 2024/25, but the commission took into account the fiscal constraints and the budgetary cuts.
SRC chairperson Lyn Mengich. /FILE