Treasury rejects call for merger of two public servants' pension schemes

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The Treasury wants Parliament to reject a petition seeking to amalgamate two civil servants' pension schemes.

The Treasury Principal Secretary Chris Kiptoo said the Non-Contributory Defined Benefit (DB) pension scheme and the Public Service Superannuation Scheme (PSSS) are fundamentally different in legal character, benefit design, financing mechanism, actuarial treatment, and fiscal structure.

Dr Kiptoo told the National Assembly’s Committee on Public Petitions that no discrimination arose when the country transitioned public servants to the PSSS Fund scheme in January 2021.

“In view of the foregoing, the National Treasury respectfully recommends that the committee does not recommend amalgamation of the legacy Defined Benefit arrangement with PSSS, given the fundamental differences in their legal, benefit, financing and actuarial structures and the need to protect accrued pension rights and PSSS members' accumulated retirement savings," Dr Kiptoo said.

“Notes that the coexistence of the legacy Defined Benefit pension arrangement and the Public Service Superannuation Scheme represents a statutory transition from an unfunded pay-as-you-go (PAYG) arrangement to a funded contributory retirement benefits framework and does not, in itself, constitute discriminatory treatment.”

Dr Kiptoo appeared before the committee that is scrutinising a petition submitted by members of the Kenya National Association of Public Service Pensioners in Kericho on behalf of retired public servants across the country.

The petitioners raised concerns over unequal benefits, delayed payments, and the failure to review pensions in line with rising economic pressures.

The petition was filed by John Serem, Richard Bett, and Olive Chepkoech, arguing that changes introduced under the Public Service Superannuation Scheme Act, 2012 have left many pensioners at a disadvantage.

They claimed that the current pension framework governing the public service, said the government, through the PSSS Act, 2012, converted the previous Non-Contributory Defined Benefit (DB) pension scheme to a Defined Contributory (DC) scheme effective January 1, 2021.

Dr Kiptoo, who was represented by Pensions Secretary Alfred Kagika said as at July 31, 2026, the Non-Contributory Defined Benefit pension scheme had 319,207 pensioners or beneficiaries in payment with a monthly pension payroll of approximately Sh.7.8 billion, equivalent to approximately Sh93.7 billion per annum.

He said as at June 30, 2026, the PSSS had approximately 529,635 active members, with accumulated assets of approximately Sh343.75 billion.

Dr Kiptoo said the coexistence of the two arrangements is a consequence of the transition from a legacy unfunded Defined Benefit system to a funded contributory Defined Contribution system.

The petitioners had prayed that the National Assembly direct the amalgamation of all non-contributory civil service pension schemes into one unified scheme, the National Treasury and Salaries and Remuneration Commission (SRC) to undertake a comprehensive actuarial study and gazette a pension increase to address inflation and repeal the Pensions Act, Cap 189 and Pension (Increase) Act, Cap 190.

Dr Kiptoo said the Treasury supports the petitioners' call for periodic actuarial assessment of public service pension obligations as the basis for future policy on pension adequacy, liability management, and long-term fiscal sustainability.

“The Treasury supports the ongoing review of the Pensions Act (Cap. 189) and the Pensions (Increase) Act (Cap. 190) with a view to modernising the legislative framework and addressing emerging policy, administrative and fiscal considerations,” Dr Kiptoo said.

“The Treasury supports continued reforms in pension administration, including ePMIS, digitisation of pension records, automation of claims processing, beneficiary verification and strengthened pension payroll controls.”

He said the Treasury is developing a transparent and sustainable framework for consideration of future pension adjustments, informed by actuarial evidence, inflation, pension adequacy and the overall fiscal position.

The PS said the Treasury supports continued efforts to simplify the processing of survivor and dependant benefits, while retaining appropriate verification and accountability safeguards.

“The Treasury recommends that future consideration of any structural changes to public pension arrangements be preceded by comprehensive actuarial, legal, financial and fiscal impact assessments, including an assessment of the implications for accrued rights, scheme members and the exchequer,” Dr Kiptoo said.

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“The government remains committed to ensuring that pensioners and other beneficiaries receive all benefits lawfully due to them, while progressively strengthening the pension system to ensure that retirement benefits remain adequate, accessible, predictable and fiscally sustainable for both current and future generations.”

Dr Kiptoo told the committee chaired by Runyenjes MP Eric Karemba that the petitioners’ concerns are being considered within the broader context of ongoing government reforms in public pension administration and retirement benefits policy.

Reporting originally appeared via Nation Africa. Read the full source for additional context.