Senate calls for fast settlement of KR pensioners dues

Kenya Railways Staff Retirement Benefits Scheme lead petitioner Rodgers Washika before the Senate Committee on Labour and Social Welfare in Nairobi, on August 20, 2025. [Elvis Ogina, Standard] The Senate Committee on Labour and Social Welfare has called for a tripartite meeting to address the pending issues surrounding the Kenya Railways Staff Retirement Benefits Scheme (KRSRBS) and report back in a month. The Committee, chaired by West Pokot Senator Julius Murgor said the management of Kenya Railways Corporation (KRC), Retirements Benefit Authority (RBA), National Treasury and aggrieved pensioners who are seeking payment to sit and agree on the way forward and report back to Senate. This came against the backdrop of the Committee's concerns over the widening crisis of unpaid pensions and terminal benefits across multiple sectors, even as petitioners who appeared before it called for 'innovative' solutions to long-standing disputes. Kenya Railway retirees under KRSRBS are demanding arrears they estimated at Sh1.6 billion, though management places the figure at Sh574 million. Despite assets worth Sh38.46 billion, nearly 90 per cent are tied up in property, leaving the scheme cash-strapped. National Treasury Cabinet Secretary John Mbadi told the Committee that pension benefits were previously provided to retired employees of KRC under a non-contributory, pay-as-you-go scheme established under the Pension Regulations made under the Kenya Railways Corporation Act. Upon the restructuring of KRC in 2006, the pension liability was approximately Sh10.9 billion, and the scheme's assets were valued at Sh14 billion, with the liability transferred to KRSRBS and backed by illiquid assets, mainly land and buildings, through a vesting Order, Legal Notice No. 169 of September 7, 2006. "From the onset, KRSRBS has operated on a non-contributory basis. No monetary contributions are made to the scheme by members or sponsors," he told the committee. [Irene Githinji] The scheme is regulated under the Retirement Benefits Act and the Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations, 2000. As per the applicable legal requirements, the scheme is managed by a Board of Trustees and has 8,365 members, including pensioners, deferred members, and beneficiaries. The Scheme's current monthly pension bill stands at approximately Sh96 million, covering all eligible pensioners. "Under the terms of the defined benefit structure, these payments continue until the death of the member, with an additional five-year pension window for the nominated beneficiary or widow(er) in accordance with the Scheme rules," the CS said. "It is also important to note that the Scheme also derives income from residential houses built during the colonial period, which remain under its ownership. These properties currently generate a monthly revenue ranging between Sh20 million and Sh25 million, contributing to the overall cash flow used for pension payments and Scheme administration," he also added. He also said consistent monthly pension payments to members have been made possible, in part, by funds received from the Government's compulsory acquisition of the Nairobi Railway Club land. From the audited accounts of the scheme for the year ending June 30, 2024, the scheme had a total asset value of Sh38.46 billion, out of which Sh34.26 billion (89.1 per cent of the total assets) is immovable property. Mbadi said the proportion of the scheme fund comprising immovable property far exceeds the regulatory maximum of 30 per cent. To this end, Mbadi said the scheme is highly illiquid and, in some instances, this has delayed the payment of pensions. The latest actuarial valuation for the scheme as at June 30, 2023, reported total assets of Sh29.41 billion against total liabilities (inclusive of reserves) of Sh17.35 billion, yielding a surplus of Sh12.06 billion. This reflects a funding ratio of 169.5 per cent, exceeding the statutory minimum of 100 per cent, thereby indicating the scheme's solvency and its capacity to meet its obligations. He said KRSRBS holds substantial real estate assets, which have the potential to generate stable and significant income. "Effectively leveraging these assets will be key to ensuring the timely and consistent payment of pensions, gratuities, and other retirement benefits to members of the Scheme as they fall due. The Government is committed to its obligations for compensation for the Nairobi Railway Club land. This will provide the Scheme with the liquidity needed to meet its commitments and strengthen the welfare of retired railway workers across the country," he said. Also before the committee were ex-employees of the defunct Kenya Cooperative Creameries (KCC) who decried the long wait for benefits following the 1999 receivership. But according to Mbadi, the prevailing legal position - as affirmed by the Court of Appeal - is that, since the termination of the employees occurred when KCC Ltd was under private management and in compliance with Section 3(1) and (2) of the Transfer of Business Act, there is no established legal obligation upon the Government. "Consequently, the National Treasury respectfully maintains its view that the petition be dismissed," Mbadi said. Meanwhile, the committee has resolved to fine Cooperatives Cabinet Secretary, Wycliffe Oparanya Sh500,000 for consecutively failing to honor summons to provide information on the matter and directed that he be re-summoned in September. Citing Article 125 of the Constitution and Sections 18 and 19 of the Parliamentary Powers and Privileges Act, 2017, senators noted that parliamentary committees wield the same authority as the High Court to enforce attendance.

Senate calls for fast settlement of KR pensioners dues

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