The retirement package for county lawmakers is set for a major change after MPs approved a cheaper pension model that will replace the current gratuity system for MCAs elected or nominated from 2027.
The National Assembly’s Committee on Social Protection turned down several demands by the County Assemblies Forum (CAF), including higher county contributions, early access to retirement benefits and medical cover after leaving office.
Under the committee’s proposal, MCAs will contribute 7.5 per cent of their earnings towards the pension scheme, while county governments will contribute 15 per cent.
The arrangement is far below what CAF had proposed. The forum had asked MCAs to put in 12 per cent of their salary and allowances, with county assemblies contributing 31 per cent.
CAF had argued that the higher contribution would provide county legislators with a retirement package closer to that enjoyed by members of the National Assembly.
The forum, which represents the 47 county assemblies, also sought an exemption for MCAs from making National Social Security Fund (NSSF) contributions once they joined the new pension plan.
Other demands included a separate medical scheme for MCAs after retirement and a reduction of the retirement age from 55 years to 45.
CAF also wanted allowances paid to legislators to be taken into account when calculating pension contributions and benefits.
The proposals were presented before the committee chaired by Thika Town MP Alice Ng’ang’a as MPs considered the County Assemblies Pension Scheme Bill, 2024.
The committee, however, declined the financial incentives proposed by CAF, with the lawmakers citing the need for a pension system that counties can afford to maintain.
MPs backed the position of the National Treasury that a contributory arrangement would be a better option than the existing gratuity system.
Treasury estimates indicate that counties currently spend around Sh6.2 billion on MCA gratuity during each five-year electoral cycle.
The proposed pension system is expected to bring that expenditure down to about Sh3 billion for every five-year term.
This would give taxpayers savings of approximately Sh3.2 billion in each electoral cycle, amounting to about Sh9.6 billion over three cycles.
The scheme is not expected to benefit MCAs serving in the current county assemblies. Its provisions will instead cover elected and nominated MCAs who enter office following the 2027 General Election.
More than 2,200 county legislators are expected to fall under the new pension arrangement once the next assemblies are constituted.
Currently, MCAs do not receive a monthly pension under a contributory scheme. Instead, they are paid gratuity after completing their five-year term, with the amount calculated at 31 per cent of their basic salary for each completed year.
The committee further recommended that any other benefits introduced for MCAs should first receive approval from the Salaries and Remuneration Commission (SRC).
This position effectively blocks CAF’s request for post-retirement medical insurance and its proposal to allow county legislators to start drawing retirement benefits at 45.
CAF has opposed the proposed arrangement, warning that it could leave MCAs worse off when they retire compared with the benefits available under the current gratuity system.
The forum said the proposed law does not adequately meet the retirement needs of county legislators and maintained that the existing system offers better benefits.
“We wish to note that the Bill may not serve the pension needs of MCAs, as the current gratuity framework is much better compared with the pension benefits provided in this Bill,” the forum said.