The Public Service Commission (PSC) has dismissed claims that Kenya’s shift from the traditional Defined Benefit pension scheme to the contributory Public Service Superannuation Scheme (PSSS) created a discriminatory two-tier pension system, saying workers were given a legal choice during the transition.
The Commission told the National Assembly Public Petitions Committee on Tuesday, August 11, 2026, that officers aged 45 years and above were allowed to decide whether to move to the new scheme or remain under the old arrangement.
The committee was considering Petition No. 10 of 2026 filed by John Serem, Richard Bett and Olive Chepkoech on behalf of the Kenya National Association of Public Service Pensioners, Kericho Branch.
The petitioners are seeking the consolidation of non-contributory civil service pension schemes into one sustainable framework, an actuarial review of pension benefits and measures to protect retirees from the effects of inflation.
They are also calling for a review of the Pensions Act, Cap. 189, and the Pensions (Increase) Act, Cap. 190.
The petitioners argue that the implementation of the Public Service Superannuation Scheme Act, 2012, from January 1, 2021 created unequal treatment between serving employees and retirees. They contend that pensioners remaining under the Defined Benefit scheme receive inadequate and irregular payments.
They have further questioned the statutory commutation of one-quarter of pension benefits, arguing that it reduces retirees’ monthly income. They also want regular actuarial reviews and pension increases to restore the purchasing power of retirees affected by rising living costs.
PSC, however, said the transition followed the law and did not amount to discrimination.
“It is correct that, with effect from 1st January 2021, the public service transitioned from the Defined Benefits Scheme administered by the National Treasury to the Defined Contribution Scheme established under the Public Service Superannuation Scheme Act (PSSS Act),” the Commission said.
It cited Section 5 of the PSSS Act, which provided for automatic membership for officers below 45 years, while those aged 45 years and above could choose whether to join.
“Under Section 5(1)(a)(ii), every officer above 45 years at the PSSS's commencement was given the option to join the Scheme; no discrimination arose. Officers who chose to remain in the Defined Benefits Scheme did so by exercising that right,” PSC said.
The Commission also rejected calls to transfer retirees already receiving benefits under the old scheme into PSSS, saying the new arrangement cannot apply retrospectively.
“As for officers who had already retired before the transition, the PSSS Act cannot apply retrospectively. The PSSS is, moreover, a contributory scheme; since these retirees did not contribute to it, they cannot now be converted to PSSS benefits and their pensions remain fully funded by the Government,” it said.
PSC further argued that retirees and serving employees belong to different categories and are therefore not being subjected to unequal treatment.
The State Department for Public Service and Human Capital Development said the pension reforms were prompted by the rising cost of unfunded public service pensions. Under the former system, retirement benefits were financed entirely by the Exchequer, while PSSS is funded through contributions from employees and the Government.
The new scheme had 529,635 members as at June 30, 2026, according to the government presentation.
The Public Service Superannuation Fund (PSSF) told the committee that merging the two schemes was possible but would require extensive reforms because they operate under different legal and financial structures.
“The contributory and non-contributory schemes operate under different legal and statutory regimes. The non-contributory civil service scheme is unfunded and benefits are discharged on a pay-as-you-go model whereas PSSF is funded and both employees and the Government contribute towards members’ retirement benefits,” PSSF said.
The Fund said any merger would require a policy directive from the National Treasury and changes to the existing laws or enactment of a new pension law.
“Parliament has to enact a comprehensive amendment Act or a new consolidated public service pension Act,” PSSF said.
It cautioned that accrued pension rights would have to be protected during any restructuring, warning that converting existing Defined Benefit entitlements into individual Defined Contribution accounts without consent or equivalent compensation would be unconstitutional.
PSSF proposed transferring accrued benefits into individual Defined Contribution accounts based on an independent actuarial valuation, or establishing a ring-fenced Defined Benefit sub-fund to manage existing Cap. 189 liabilities.
PSC also agreed that pension benefits should be reviewed periodically to take account of inflation and the cost of living.
“The Commission agrees that periodic actuarial evaluations are needed to review pension benefits against inflation and the cost of living,” it said.
The Commission said a Multi-Agency Task Team established by the National Treasury in 2024 was already reviewing pension laws and related concerns.
PSSF added that Treasury had undertaken an actuarial assessment of the non-contributory Civil Service Pension Scheme as at June 30, 2024, but said implementation of its recommendations falls under the National Treasury.
PSC maintained that while concerns over pension increases, inflation and administration deserve consideration, the claim of discrimination does not stand.