The Ministry of Finance has begun processing pension payments for about 7,000 retirees, including teachers, following months of delays due to a dispute with the Kenya Revenue Authority (KRA). This step is expected to bring relief after their suffering without income. The ministry explains that payments will follow the previous tax rules to avoid further delays.
The Ministry of Finance has launched the process to pay pensions to 7,000 retirees affected by delays since leaving public service. The holdup stemmed from a disagreement between the Pensions Department and the Kenya Revenue Authority (KRA) over a new law effective December 27, 2024, which provides a tax waiver on pension lump sums. The ministry wanted all retirees with unprocessed lump sums to benefit, but KRA insisted the waiver applies only to payments starting after that date.
Finance Minister John Mbadi stated, “To prevent further suffering for the 7,000 affected retirees, the Pensions Department has decided to immediately process those payments by considering the tax system that existed before the amendments.” This means retirees whose payments were not ready by the waiver's start will be taxed under the old rules.
The ministry has sought legal advice from the Attorney General on transitional cases. If the advice confirms the waiver should apply, a mechanism to refund deducted taxes will be established. Additionally, all public officers retiring from December 27, 2024, are fully exempt from monthly pension tax to boost their income and help cope with living costs.
Nevertheless, thousands of pension files remain stuck at Bima House, with retirees reporting frequent unanswered visits to offices. Retired teacher David Thaguambi, who left work on July 1, 2024, described the hardships from this confusion. Secretary General of the retirees' association, Kepha Mshambala, welcomed the move but noted it is overdue, as delays have plunged elders into poverty when they deserve dignity.
