Treasury fails to release Sh30 billion in pension payments- CoB
The delays come as the government struggles with a growing pension payout backlog, with the Treasury now under pressure to release Sh57.24 billion in June alone, having paid out Sh165.9 billion between July 2024 and May 2025, out of the total annual pension budget of Sh223.1 billion.
Ongoing delays and repeated system downtimes have left retirees in financial uncertainty, with the Controller of Budget revealing that the Treasury failed to allocate Sh30.14 billion in processed pension payments in the nine months to March 2025.
In her latest report, Controller of Budget Margaret Nyakang’o noted that ordinary and commuted pensions processed for payment during the period totalled Sh131.92 billion. However, the exchequer only released Sh101.78 billion, leaving a large portion of claims unfunded.
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The delays come as the government struggles with a growing pension payout backlog, with the Treasury now under pressure to release Sh57.24 billion in June alone, having paid out Sh165.9 billion between July 2024 and May 2025, out of the total annual pension budget of Sh223.1 billion.
Treasury’s monthly funding of pensions and gratuities has averaged Sh15 billion, a rate far below what is needed to meet the year’s obligations.
If the balance is not disbursed before the end of June, the Treasury risks defaulting on the pension budget for the second year in a row.
The Controller of Budget also observed that the government disbursed Sh115.1 billion to pensioners during the nine-month period, which was a decline from Sh129.2 billion paid out in a similar period the previous year.
Pension and gratuity payments are made under the Consolidated Fund Services (CFS), which also covers public debt and salaries for top State officers, including the President.
In her report for July 2024 to March 2025, Nyakang’o noted that pension and gratuity spending received the lowest share of exchequer issues among CFS allocations.
“Salaries, allowances, and miscellaneous received the highest proportion of exchequer issues to revised net estimates at 94 per cent, while pensions and gratuities had the lowest at 52 per cent,” the report said.
The underfunding issue is not new. In the financial year ending June 2024, the Treasury failed to remit Sh23.78 billion to pensioners due to cash flow problems, affecting 342,837 people, comprising 259,222 retirees and 83,615 dependents.
“The Sh23.78 billion relates to carryover from financial year 2023/24 to first supplementary estimates for financial year 2024/25. This was the exchequer request to pay pensions claims processed during the period, but was not funded during the period due to liquidity challenges,” Treasury said in its submissions to Parliament’s Public Debt and Privatisation Committee.
The Treasury also confirmed it failed to release Sh21.22 billion in lump sum benefits due to retirees, citing the same liquidity challenges.
In addition, Sh2.56 billion in contributions to the Public Service Superannuation Scheme was also not sent, further compounding the crisis.
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