PSC defends pension transition, rejects discrimination claims by retirees

The Public Service Commission (PSC) has defended the move from the old Defined Benefits pension scheme to the contributory Public Service Superannuation Scheme (PSSS), dismissing allegations that the alteration established a discriminatory dual-pension system. On August 11, 2026, PSC Deputy Chief Executive Officer Gerald Kuhaka testified before the National Assembly Public Petitions Committee.

The transition, initiated on January 1, 2021, offered eligible public servants the option to enroll in the new contributory scheme or maintain their existing Defined Benefits arrangement. Kuhaka was addressing Public Petition No. 8 of 2026, submitted by the Kenya National Association of Public Service Pensioners in Kericho. The petitioners contended that the new pension structure unfairly disadvantaged retirees.

Deputy Chief Executive Officer Kuhaka clarified that personnel aged over 45 years at the PSSS inception were granted the choice to join the new scheme. "Every officer aged above 45 years at the commencement of the PSSS was given the option to join the Scheme, while officers who chose to remain in the Defined Benefits Scheme did so by exercising that right," he stated.

Critics argued that the statutory commutation of one-quarter of pension benefits diminishes retirees' monthly income, despite pensions being an accrued entitlement under Section 5 of the Pensions Act. They also contended that the National Treasury had neglected periodic actuarial reviews and failed to implement pension increases recommended by the Salaries and Remuneration Commission (SRC), leading to reduced purchasing power due to inflation.

Furthermore, retirees raised concerns over delays in receiving dependants' benefits under Section 17 of the Pensions Act, attributing the delays to bureaucratic procedures. The group urged Parliament to consolidate all non-contributory civil service pension schemes into a unified, sustainable framework and called for an actuarial review of pension schemes, inflation-linked pension adjustments, and a comprehensive examination of the Pensions Act and the Pensions (Increase) Act.

Kuhaka informed MPs that the National Treasury had established a Multi-Agency Task Team in 2024 to review pension legislation, with the PSC as a participant. The review is ongoing, and any subsequent amendments or repeals would proceed through the regular legislative process, addressing the cited concerns. Public Service Principal Secretary Jane Imbunya explained that the shift to a contributory pension scheme aimed to enhance pension cost sustainability and predictability, alleviate the tax burden on future generations, align Kenya's public service pensions with contemporary retirement-benefit practices, and encourage domestic savings for economic growth.

She added that the new system empowered members with greater transparency and control over their retirement funds. Chief Executive Officer Jonah Aiyabei of the Public Service Superannuation Fund clarified that the contributory and non-contributory schemes operate under distinct legal frameworks, and a merger would necessitate a policy directive from the National Treasury.

Regarding pension inflation protection, Aiyabei stated that the fund had adopted an investment policy ensuring returns are sensitive to inflation through diversified investments. Investment risk in the Defined Contribution Scheme differs from the Defined Benefits Scheme, where retirement benefits are predetermined. In the latter, members bear 100% of the investment risk, which includes selecting their contribution levels, while the investment team assumes the risk in the new scheme.