Uganda: Public Service, Muhakanizi Disagree On Pension Formula

The Ministry of Public Service has dismissed as inapplicable the formula issued by the ministry of Finance for determining pension and gratuity.

Ms Catherine Bitarakwate Musingwiire, the permanent secretary in the Ministry of Public Service, on August 9 wrote to all ministries, departments and local governments, asking them to disregard an earlier communication issued by her Finance counterpart, Mr Keith Muhakanizi, on the method for gratuity computation.

“I refer to the letter by the Permanent Secretary and Secretary to the Treasury, communicating to all accounting officers, among other things, the formula for gratuity computation. In the letter, the formula for gratuity was stated as length of service multiplied by one five hundredth and the annual basic salary (gratuity = LS x 1/500x annual basic salary). This formula is not correct and should, therefore, be disregarded,” Ms Musingwiire noted.

In the August 8 letter, Mr Muhakanizi said processing payment of pension and gratuity should be based on the time of retirement where those who retire first should access the benefits first.

“The formula for calculating gratuity is (gratuity =length of servicex1/500 x annual basic salary). The annual basic salary is based on the last salary scale paid to that particular retiring staff as indicated on the last payslip,” he said.

But Ms Musingwiire a day later said her ministry has automated the pension and gratuity formula in the Integrated Personnel and Payroll System to ensure accuracy of the computation results and that no benefit should be computed outside the database.

She clarified that while computing pension and gratuity in case of mandatory retirement, one looks at the length of service in months, annual basic salary at retirement, mode of retirement and the pension fraction of one five hundredth (1/500).

“Annual pension is determined by multiplying the annual basic salary by the length of service in months divided by the pension fraction of one five hundredth (1/500) denoted as (pension =LS (months) x annual basic salary/500) where LS refers to length of service,” Ms Musingwiire said.

She further explained that gratuity, also known as commuted pension gratuity, is an optional advance from the annual pension and is derived by multiplying the annual pension by one third (1/3) multiplied by 15 (CPS =annual pensionx1/3×15).

Daily Monitor could not speak to Ms Musingwiire yesterday as she was reportedly at State House for a meeting.

Sources at Public Service also agreed with Mr Muhakanizi’s submission that some accounting officers were soliciting for bribes before they can process pensioners’ pay. In some instances, they said, they had recommended to accounting officers in districts that human resource employees be interdicted as allegations levied against them are investigated.

Calls to Mr Muhakanizi’s known telephone contact went unanswered yesterday.