This archive report was first published on 5 August 2020.
Kenya's government is racing against time to prevent a pension crisis that could destabilize its finances. The country's pension bill is projected to reach over Sh100 billion by the end of the financial year, up from Sh27.9 billion in 2013/14.
According to the Ministry of Finance, Kenya spends 2.9 per cent of its annual budget on pension payments, a figure that is expected to balloon due to the country's ballooning debt repayments and reduced tax revenue caused by the coronavirus crisis.
Finance Cabinet Secretary Ukur Yatani announced a new contributory pension scheme for government workers, which will kick in next January. Under the scheme, employees will be allowed to contribute up to 30 per cent of their monthly salary to a fund, which is expected to collect over Sh3 billion every month.
“If unchecked, the spiralling pension costs will rapidly get out of control in the very near future,” warned Julius Muia, the Principal Secretary at the Finance Ministry, during an online launch ceremony.
