A funding shortfall of Sh30.14 billion in processed pension claims has exposed thousands of retirees to long delays, with the Controller of Budget warning that system downtimes and slow exchequer releases continue to hamper payments.

In her latest report covering the nine months to March 2025, Controller of Budget Margaret Nyakang’o noted that a total of Sh131.92 billion had been processed for ordinary and commuted pensions, but only Sh101.78 billion was released from the exchequer, leaving a large portion of claims unpaid.

The Treasury’s failure to fully fund pension obligations comes as it faces mounting pressure to clear a Sh57.24 billion pension bill in June alone.

Between July 2024 and May 2025, Treasury paid out Sh165.9 billion from the total annual pension budget of Sh223.1 billion.

With just days to the end of the financial year, Treasury risks defaulting on its pension obligations for the second year in a row.

It has only been releasing an average of Sh15 billion per month for pensions and gratuities—far short of the amount required to meet all claims.

The Controller of Budget also revealed that the government disbursed Sh115.1 billion to pensioners during the nine-month period under review, a drop from Sh129.2 billion paid during a similar period the previous year.

Pension and gratuity payments are drawn from the Consolidated Fund Services (CFS), a budget vote that also covers public debt and salaries for senior State officers including the President.

However, pensions received the lowest share of funding among CFS items, according to the Controller of Budget’s report for the period between July 2024 and March 2025.

“Salaries, allowances and miscellaneous received the highest proportion of exchequer issues to revised net estimates at 94 percent, while pensions and gratuities had the lowest at 52 percent,” the report said.

This is not the first time retirees have been hit by delays due to underfunding. In the financial year ending June 2024, Treasury failed to remit Sh23.78 billion in pension payments due to liquidity problems, affecting 342,837 people, including 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 submissions further revealed that Treasury did not release Sh21.22 billion in lump sum benefits owed to retirees and failed to send Sh2.56 billion in contributions to the Public Service Superannuation Scheme, all due to the same liquidity issues.