Pensioners are facing tough times after the National Treasury moved to revise the pension payout plan downwards by more than 17.5 billion shillings.
The revision of pension payout downwards is set to hit hard on retirees who are already struggling with the effects of Covid-19 as well as tough economic times.
The government has also been accused of delaying to release the pension payout to beneficiaries on several occasions despite President Uhuru Kenyatta giving an order of priority to them.
The National Treasury had budgeted for 104.89 billion shillings as pension payout but revised it downwards to 86.99 billion shillings.
The government has raised concerns over the increasing financial burden occasioned by too many pensioners. Between July 2019 and April 2020, the government used 71.84 billion shillings, a rise of 36.44 percent to pay retirees.
Civil servants, unlike those from the private sector, do not contribute towards their pension. Their payment is taken directly from the taxes and has to be paid out monthly to individual beneficiaries.
With stats indicating that the majority of civil servants are aged and might be retiring in the next few years, the government will be forced to dig deeper to meet the financial demand, a move that might lead to an increase in taxes.
At the same time, the National Treasury has proposed the taxing of pension paid out to retirees as it moves to preserve cash for an economy that seems mutilated by the pandemic. The proposal to tax pension is set to be presented in parliament when the National Assembly resumes sittings.
In order to take care of the vulnerable, especially the senior citizens, President Uhuru Kenyatta announced the release of 8.5 billion shillings under the Inua Jamii program. The cash was since released though there have been claims of some of being looted.
As the government thinks of opening up the economy, only time will tell the extent of the wound.
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