EDITORIAL: Free pension untenable

For more than a decade, the government has with little success talked of reforming the public pension scheme for sustainability.

Lacking is concrete action, leaving the pension time bomb to keep ticking.

The anchor of the reforms was to introduce a contributory scheme that will encourage civil servants to save monthly, cushioning taxpayers from shouldering the entire pension bill.

Civil servants unlike their private sector counterparts, receive free pension that is paid straight from taxes, the assumption being that the arrangement is working. Not anymore.

The latest official figures show that the public pension bill is becoming unsustainable and eating into resources that should be used in upgrading roads, revamping the water supply network and stocking rickety public hospitals, among other public goods.

This pension bill is set to hit Sh104 billion in the next fiscal year, higher than the Health ministry’s entire budget. It is also expected to hit Sh148.4 billion in next two years, from less than Sh15 billion 12 years ago.

Trade unions have opposed the contributory scheme. But that is where public education needs to come in. Employees should be made to understand that pension is more about saving than a deduction. Ultimately, the State will have to introduce a contributory scheme.