Is the Public Finance Management Act to blame for the pensioners’ woes?

Tuesday November 10 2015

By Nelson Wesonga

It’s tough living without one’s salary for one month,” says Moses Kintu*, 70.
“Now imagine a pensioner going without his or her pension for four months.”
Kintu used to work in the Ministry of Local Government until 10 years ago.
He has been drawing a pension since then. He does not say what his monthly pension is or was.

No pay
When Professor Apolo Nsibambi was the minister of Public Service, Kintu says all pensioners would receive their pension by, latest, the 28th of every month.
Things have since changed. For the last four months, the government has not paid him his pension. Why? There are claims that the government is broke.
The Secretary to the Treasury, Mr Keith Muhakanizi, refutes the claim.
However, he adds that ‘government revenue is slightly below target’. He does not give specifics.
“Revenue from treasury bonds is bad,” Muhakanizi says, adding, “As a result, where a need arises, we shall cut budget expenditure to be in line with revenue.”
This fiscal year, the government projected it would raise Shs1.384 trillion from treasury bills and bonds.

The law
Muhakanizi, however, blames the Public Service ministry and the Public Finance Management Act 2015 for the delay to clear pension arrears.
Public Service, he claims, misinformed government about the number of pensioners in many of the ministries, departments and local governments.
“Some got more than they need whereas others got less,” Muhakanizi told Daily Monitor during an interview recently.
Public Service minister, Mr Muganwa Kajura, and the State minister, Ms Prisca Ssezi Mbaguta, who can only be met on appointment, could not be reached on phone.

Muhakanizi adds that Finance cannot reallocate money from those who got more to those with less or nothing.
Section 20 of the Public Finance Management Act says Parliament must authorise a reallocation.
The ministry now wants this section amended, so that it can transfer money from one vote to another.
However, in September, Parliament rejected the proposed amendment, arguing the government might abuse it by spending beyond budget since it would more or less have a blank Bank of Uganda cheque.

Muhakanizi says that the pensioners who have not received their dues have to wait until Parliament changes its mind about Section 20 – to allow some flexibility.
That would mean, with many MPs now campaigning to be re-elected in the 2016 General Election, pensioners would have to wait until March 2016, after the election.
Others allege the money for pensioners, who have not been paid for four months, has been diverted to the National Resistance Movement’s slush fund.
Daily Monitor could not verify these claims.

Undeniably though, politics in Uganda is monetised.
Another explanation why some pensioners have not been paid, clerks in one of the ministries, say is that the money for pension was misappropriated.
The Prime Minister, Dr Rukahana Rugunda, told this newspaper during an earlier interview the delay is because the government is still verifying the particulars of the pensioners.
Government embarked on the verification exercise after it was established that officials in the Public Service and Finance ministries as well as in a commercial bank had in 2011 colluded to create nonexistent pensioners and siphoned Shs165 billion.


Following an exposure by the media, the government interdicted the officials and one of the suspects has since offered to refund at least Shs300 million.
Critics, however, say it is improbable that government, in this information age, can spend more than four months verifying the particulars of just 63, 715 pensioners.
Muhakanizi adds another twist, saying some accounting officers suggested that they wait until the end of October to pay the July, August and September pension arrears.
“And that is reasonable, says Muhakanizi, “because that person, though he has gone beyond the deadline, it doesn’t make sense to pay bits. So I decided to allow them that flexibility.”

The impact of failing to pay pensioners
Pensioners do not pay direct taxes. So the government can live without paying them for months on end.
But it just worsens the dependence burden since besides the young people who are not employed; the working class has to support the elderly.
An elderly lady – who refused to divulge her name – says, “Pensioners are few, sickly and needy. But they might be that vote that could deny President Museveni a win in 2016.”
The government pays a few, which a retired teacher in Mbale District, says is to give the many pensioners who have not been paid false hope that they will be paid next.

As Kintu, like many other pensioners, starts the fifth month without receiving his pension, he says he will have to befriend more shopkeepers in his Nakawa neighbourhood in Kampala so that they could give him items on credit.
“When one cuts the lines of credit, I approach another shopkeeper,” Kintu says. “But for how long will I live like that?”
Esau Nyapidi*, 67, a retired teacher relies on his children, who have their own families to fend for, to support him.

Why improve pension payments?
A more efficient pension system will help Uganda’s elderly better support themselves after retirement, as well as help the country avoid the financial pressure that normally arises as the number of public pension recipients grow, according to a World Bank report titled, “Reducing Old Age and Economic Vulnerabilities: Why Uganda should Improve its Pension System.”