Treasury Cabinet Secretary John Mbadi has dismissed the proposal to grant former councillors a one-off Sh200,000 honorarium, telling senators that the payment has no legal foundation.

Instead, he recommended that the former local leaders be considered for support under the State’s Inua Jamii social protection programme.

Appearing before the Parliamentary Labour and Social Welfare Committee on Wednesday, Mbadi said that only a legal framework could allow the government to make such payouts, even though the request involved just 328 former councillors who served for less than 20 years.

He explained that a 1994 presidential circular only recognised councillors who had completed 20 years of continuous service, leaving out the majority who worked part-time without pension entitlements.

“Circular 13/94 only recognises councillors with 20 years of continuous service as eligible,” he said.

Nominated Senator Miraj Abdullahi asked whether the Treasury had carried out a forensic review to confirm how many of the 328 councillors were still alive, as recommended by the Attorney General.

In reply, Mbadi said it was up to the former councillors to present their claims to the Pensions Department if they believed they qualified.

Some senators, including Joe Nyutu of Muranga and Okongo Mogeni of Nyamira, urged the Treasury to pursue compassionate solutions.

Nyutu suggested that the government could consider presidential intervention similar to the support extended to national sports figures like the Harambee Stars.

But Mbadi stood firm, insisting that only a law passed by Parliament could provide the authority for such payments.

He also drew attention to a longstanding issue of unremitted pension deductions by counties and former local authorities, which he described as a “criminal” act.

He revealed that arrears of unremitted employee contributions had risen to Sh103.3 billion by October 2024.

If the Inua Jamii option is adopted, former councillors would be entitled to Sh2,000 monthly stipends through the cash transfer programme, which already supports elderly citizens, orphans and persons with disabilities.

The committee also turned its focus to the Kenya Railways Staff Retirement Benefits Scheme (KRSRBS), where over 8,000 pensioners are demanding arrears estimated at Sh1.6 billion, even as management claims the liability is Sh574 million.

Although the scheme controls assets worth Sh38.46 billion, nearly 90 percent is tied up in property, limiting liquidity.

Mbadi explained that the scheme was set up as non-contributory, meaning members and sponsors did not make any direct payments.

“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,” he said.

To ease the scheme’s cash flow problems, he disclosed plans for the Affordable Housing Board to acquire 141 acres of KRSRBS land in Makongeni for housing projects.

“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,” he said, adding that the proceeds would help stabilise the fund and allow timely payments to retirees.

Separately, former Kenya Cooperative Creameries (KCC) employees, who have waited over two decades for dues following the company’s 1999 receivership, petitioned the committee through lawyer Simoni Namada.

Mbadi however, pointed to a Court of Appeal ruling which cleared the government of any legal responsibility to pay them.

The session ended with the committee fining Cooperatives Cabinet Secretary Wycliffe Oparanya Sh500,000 for ignoring summons over ex-KCC workers’ SACCO benefits.

Lawmakers directed that he be summoned again in September, citing Article 125 of the Constitution and provisions of the Parliamentary Powers and Privileges Act that give committees authority similar to the High Court in compelling attendance.