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1. Page 1 KENYAN PUBLIC SERVICE PENSION REFORMS PRESENTATION at UNECA CONSULTATIVE MEETING 26 MARCH 2009 Anne K. Mugo Pensions Secretary, GoK

2. Page 2 TOPICS FOR PRESENTATION STRUCTURE OF KENYA RB SECTOR CSPS SCHEMES EXPENDITURE TRENDS & BUDGETS BRIEF HISTORY CURRENT STRUCTURE OF SCHEMES CSPS REFORMS: PSSS FEATURES IMPLEMENTATION LESSONS LEARNT AFRICA COMPARISON

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6. Page 6 CSPS PENSIONS EXP 10 YRS KShs. bn

7. Page 7 CSPS - CURRENT BUDGET BENEFITS PAID: Budgeted 2008/09 KShs.26.2bn ($0.33bn) -about: 1.4% of 2007 GDP - Compare UK 5-6% and Italy 15% of GDP. 4.6% of the Governments Rec. Expenditure 2008/09 Ranked 6th in total Exp after Educ, Def & Int Sec ADMIN EXPENSES = Budgeted 2008/09 KShs.294m ($3.6m) i.e. 1% of Benefits paid.

8. Page 8 CSPS - PROJECTED BUDGET Projected to rise to KShs30bn ($0.4bn) by 2009/10 Actuary estimates future average growth rate of 15% p.a. To peak at about KShs.150bn ($2bn) in 2034 even if closed to new entrants!!

9. Page 9 CSPS SCHEMES BRIEF HISTORY 1921 European Widows & Orphans 1927 Europeans Officers 1932 Non-Europeans: Mostly Asians 1946 Pensions Act Cap. 189 & Regulations 1980 Armed Forces Pensions 1984 Parliament Scheme 2003 President Scheme

10. Page 10 CSPS REFORM - PSSF Civil Service (CS) Teachers (TSC) Disciplined Forces (DF) NB: The three schemes are due for Phase I reform and are: Non contributory; & Non Funded Pensions fraction 1/480; & Retm Age: 55 years

11. Page 11 OTHER CSPS SCHEMES - I Judiciary (JD) - 1/480th ; Non-Contributory; Retm 55 yr (Judges 74 yr); Armed Forces (AF) - 1/400th; - Non-Contributory; - Retm 12, 16, 20 or 55 yrs Parliament -1/300th contributory @ 12.6%/Govt 25.2% - Retm 4 President - 80%; - non-contributory; - Retm on leaving Ex-East African Community Pension non contb; - Provident contb; - Retm 55 years Parastatals (prev. in Central Govt.) various types; - contributory; -Retm 55 years

12. Page 12 CSPS REFORM: PSSS FEATURES DC with individual accounts Contributory Employees - 7.5% of basic salary : Phased in 2%;5%;7.5% Government - 15% of basic salary RBA Admin Structure emphasis on segregation Board of Trustees Custodian Manager Administrator

13. Page 13 Age 60 effective date: 5th March 2009 Sensitisation Program: 6th 30th April 2009 Scheme Commencement Date: 1st July 2009 Entry Dates: Open by 30th June 2009 Option Form to be completed by those above 45 years before 30th June 2009 New Entrants on appointment w.e.f. 1st July 2009 PSSS IMPLEMENTATION

14. Page 14 PSSS LESSONS LEARNT BEWARE THE POLITICS Timing Political Window COMMUNICATE Involve Stakeholders early WHAT IS IN IT FOR ME? Policy Makers Dilemma THE LETTER OF THE LAW Constitution; Legal framewk BACK TO SQUARE ONE Revisit Options KEEP IT SIMPLE No Perfect Model; What suits your scheme/country - What can start now; what later PROPER GOVERNANCE STRUCTURE

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16. Page 16 KENYAN PUBLIC SERVICE PENSION REFORMS THANK YOU

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