Treasury unveils plan to clear Kenya Railways pension arrears
CS explained that the Kenya Railways Staff Retirement Benefits Scheme (KRSRBS) was facing difficulties because it had been set up as a non-contributory scheme.
The government has disclosed a plan to settle pending retirement benefits owed to former Kenya Railways employees through the sale of land owned by their pension scheme.
National Treasury Cabinet Secretary John Mbadi, while appearing before the Labour and Social Welfare Committee on Wednesday, August 20, explained that the Kenya Railways Staff Retirement Benefits Scheme (KRSRBS) was facing difficulties because it had been set up as a non-contributory scheme.
"From the onset, the Kenya Railways staff benefits scheme has operated on a non-contributory basis. No monetary contributions are made to the scheme by members or sponsors," Mbadi said.
He added that the scheme’s main source of income had been investments, particularly in real estate, and that this was the reason payments had often been delayed.
To resolve the issue, the government is moving to support the scheme through transactions involving its land holdings.
One such plan is the acquisition of land in Makongeni by the Affordable Housing Board. Mbadi revealed that discussions are already in progress.
"The affordable housing board has expressed formal interest in acquiring approximately 141 acres of land in the Makongeni area, which is currently owned by the scheme," he stated.
He further explained that the land would be used for the development of housing units, noting that the deal represents a valuable opportunity for the pension fund.
"The intended use of this land is for the development of residential housing units. This transaction presents a strategic opportunity for the Kenya Railways staff retirement benefits scheme to unlock significant value from one of its largest and most strategically related land assets."
Mbadi assured that once the sale is completed, the proceeds would boost the scheme’s liquidity and make it possible to clear dues to retired workers more consistently.
"Once the sale is finalised, substantial funds will be generated, improving the scheme's liquidity position and enabling timely and consistent payments of benefits to retired members," he said.
