Disquiet as Treasury delays pension payments for civil servants under new scheme

Frustration is mounting within the civil service following revelations of delays in pension payments to civil servants enrolled in a new government-run retirement scheme.

The issue surfaced in Parliament as senators sought explanations for the prolonged delays in disbursements under the Public Service Superannuation Scheme — a defined contribution plan introduced in 2021 to replace the older non-contributory system.

Under the PSSS, both civil servants and the government contribute to a retirement fund regulated by the Retirement Benefits Act.

The scheme is designed to ensure timely pension payouts upon an employee’s resignation, retirement, or death — with dependents entitled to benefits in the latter case.

Raising the alarm on the Senate floor, Kisumu Senator Tom Ojienda said that thousands of retired teachers and police officers have not received their pension years after leaving service.

“Could you [Treasury Cabinet Secretary] tell us why there has been a delay in processing pension funds for police and retired Teachers Service Commission officers under the Public Service Superannuation Scheme?” Ojienda said.

 “When will they be paid? There is a patent and palpable delay, yet we are still operating under the same system.”

The concerns emerged as the Senate grilled National Treasury CS John Mbadi, who acknowledged the delays and attributed them to a lack of finalised policy and legal frameworks necessary to make operational the scheme.

“The delay has been occasioned by a lack of policy guidelines, which we have now processed and are almost concluding. Once that is done, the pensions will be processed — likely within two weeks,” Mbadi told the House.

The scheme was introduced following the enactment of the Public Service Superannuation Scheme Act, 2012, but only took effect in January 2021.

All civil servants under the age of 45 were transitioned into the new system.

However, investigations by the Star reveal that delays have disproportionately affected former teachers and police officers who exited public service under the PSSS.

Sources say many have remained unpaid for years, despite having completed the required exit processes.

Insiders point to bureaucratic inefficiencies and delays in finalising the legal and regulatory frameworks needed to facilitate pension payouts.

The Star has established that draft policy guidelines are currently pending approval at the State Law Office.

“It has taken too long for the Treasury to pay us since the scheme was rolled out. We’ve waited for years. It’s added misery to our lives,” a source familiar with the matter said.

Affected retirees report their pension claims remain unprocessed long after meeting all eligibility requirements, leaving many in financial distress despite their years of service and contributions to the scheme.

Mbadi assured senators that the government was aware of the challenges and was working to resolve them. He cited poor coordination among government agencies, misplaced or slow-moving pension files, and — in some cases — corruption as contributing factors.

“I agree there have been challenges. When pensioners leave employment, they often wait too long to receive their benefits, partly due to systemic inefficiencies. However, other issues have also contributed to the delays,” he said.

Mbadi firmly denied allegations that pension funds were being diverted to other uses.

“I am not aware of any instance where pension allocations have been re-allocated. In fact, pension funds are among the most securely ring-fenced allocations,” he said.

As pressure builds from Parliament, retirees and civil society calls are growing for the Treasury to issue clear timelines, fast-track pending frameworks and restore confidence in a system that was introduced to bring efficiency and dignity to public servants in retirement.