A significant number of Kenyan retirees are struggling with low pension payments, with over 80,000 receiving only 4,000 Kenyan shillings ($33) per month. This has prompted concerns and calls for an increase to help them cope with the rising cost of living. The National Association of Public Service Retirees (KNAPS) has presented these concerns to parliament, highlighting that about 25% of its members, or 80,000 retirees, receive less than 4,000 shillings monthly.
The KNAPS has urged the government to merge the old non-contributory pension scheme with the current Public Service Superannuation Scheme (PSSS), which they claim offers better benefits. They also want pensions to be regularly increased to match the rising cost of living and for laws to be amended to protect them and their families. The Parliamentary Committee on Public Petitions has asked the Ministry of Finance and the Salaries and Remuneration Commission (SRC) to present a report within two months on the funds required to increase retirees' pensions.
The committee's report, presented to parliament on September 30, recommended that the Ministry of Finance, in collaboration with the SRC, conduct a pension cost evaluation every three years. The first evaluation is expected to be completed by December 31, 2026. However, the proposal to merge the schemes has faced opposition from various government institutions due to the potential high costs involved.
The Retirement Benefits Authority (RBA) has informed the committee that merging the schemes would require the government to first pay off accumulated pension debts estimated to exceed 1 trillion shillings ($8.2 billion). RBA Director-General Charles Machira stated that a June 2024 evaluation by the Ministry of Finance showed that these debts had surpassed 1 trillion shillings.
Currently, the Ministry of Finance uses approximately 7.8 billion shillings ($64.5 million) monthly to pay 319,207 retirees, amounting to 93.7 billion shillings ($773 million) annually. The old scheme did not deduct contributions from employees' salaries; instead, pensions were determined by laws in place at the time. In contrast, the new scheme, which began in January 2021, requires employees to contribute 7.5% of their monthly salaries, with the government matching the same amount.
By June 2026, 529,635 workers had joined the new scheme, saving 343.75 billion shillings ($2.8 billion). The SRC has stated that any pension increase must consider the government's financial capacity. The Public Service Department has also warned that raising pensions would create a long-term burden on the government, so it is essential to ensure that these payments can be sustained.
The SRC and other stakeholders will need to carefully consider these factors as they work to address the concerns of Kenyan retirees. With a substantial number of retirees relying on meager pension payments, finding a solution that balances financial sustainability with social responsibility will be crucial. The government's response to the parliamentary committee's recommendations and the retirees' pleas will be closely watched in the coming months.
Key points
- Over 80,000 Kenyan retirees receive a monthly pension of only 4,000 shillings ($33).
- The National Association of Public Service Retirees urges the government to merge the old pension scheme with the Public Service Superannuation Scheme.
- The Retirement Benefits Authority estimates that merging the schemes would require the government to pay off debts exceeding 1 trillion shillings ($8.2 billion).
