House team raises concerns over pension payout delays

Official data shows that only 61 percent (Sh136.9 billion) of the Sh223.14 billion allocated for pension in the financial year had been paid by the end of April, as concerns linger on whether retirees will get the remaining Sh86 billion before the end of the fiscal year on June 30.

Retirees missed out on Sh23 billion worth of pension in the 2023/24 financial year after the Treasury defaulted amid cash-flow hitches largely triggered by revenue shortfalls and mounting foreign debt payments.

“This level of under-performance is concerning particularly given the statutory and non-discretionary nature of pension obligations which are critical to the welfare of retired public servants,” the committee says in a review of the Consolidated Fund Services (CFS) budget for the 2025/26 year.

Public debt, pension and gratuities and salaries for constitutional office holders are all paid from the CFS account.

“The government had also failed to allocate Sh23 billion for pension and gratuity obligations in 2023/24, increasing the risk of arrears.”

The monthly pension payments are critical for public service retirees given that the majority are not involved in steady income-earning activities.

Retirees have in recent times faced a host of problems from delayed pension pay to being forced to physically visit Treasury departments in Nairobi to follow up on their disbursements.

The number of retirees remains is estimated at over 260,000 and the Treasury is anticipating a surge in these numbers by the end of June next year.

At least 85,000 public servants were expected to exit service between last year and June 2026 upon attainment of the retirement age of 60. These comprise 30,155 in the year that ended June 2024, 28,745 in the current financial year, and a further 26,500 in the 2025/26 year.

The growing numbers are set to further strain the Exchequer’s ability to promptly pay pensions given the mounting public debt payment and pressure to free cash for development projects.

For example, debt payments amounted to Sh1.25 trillion or 69.6 percent of the Sh1.8 trillion collected as tax revenue in the ten months to April this year. This high expenditure has left the Treasury with limited cash for pensions and the delivery of projects solely financed by the Exchequer.

The Treasury will roll out a new system that will help pensioners access services remotely and track the status of their claims in real-time, besides allowing government agencies to submit pension claims online at source through integration with Government Human Resource systems.

National Treasury Cabinet Secretary John Mbadi said that the new system, dubbed Pension Management System will be rolled out from July 1.

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