Blow for ex-Telkom Kenya staff as tribunal rejects Sh18bn pension claim

The dispute involved nine former Telkom Kenya workers who had retired at the official retirement age of 55 at the time, 58 workers who had taken early retirement at 50, and over 500 workers who had left service before reaching 50.

They all accused the scheme of using the wrong formula to calculate their pension, resulting in underpayment. However, the Retirement Benefits Appeals Tribunal dismissed the case last week.

“Consequently, this tribunal finds that the allegations by the appellants that retirement benefits for nine members of the second respondent who retired at the normal retirement age of 55 were miscalculated are not merited and is therefore dismissed,” the tribunal said.

However, the main bone of contention was the formula used by the scheme to calculate pensions for employees who left service before reaching 50 but had served for at least three years and were thus eligible for pension payments.

The pensioners argued that they were entitled to their full pension upon reaching the age of 50, but the scheme held that its rules stated that they could only access the pension at 55, or with reductions for earlier access.

The scheme applied a formula that reduced payments for the pensioners who chose to access their pension before reaching 55, a decision with which the tribunal concurred.

“Accordingly, we find that the claim by the appellants who left the service of the employer before attaining the age of 50, and who chose to access their benefits before attaining the normal retirement age of 55, that their benefits were miscalculated by the second respondent is without merit and it fails,” the tribunal ruled.

The tribunal also agreed with the scheme’s calculation of pension for 58 workers who took early retirement after turning 50 but before reaching the official retirement age, categorised as deferred pensioners.

Genesis of the case

The dispute began when 948 former Telkom Kenya employees complained to the Retirement Benefits Appeals Tribunal (RBAT) that they had been underpaid their pension. In 2011, the tribunal directed the RBA to address the complaint and issue a written decision.

The pensioners rejected the RBA’s decision, concurring with the formula the Telposta Pension Scheme applied, which was payment at the rate of 1/480th of each pensioner’s final salary for each complete month of service.

The pensioners appealed the decision at the Retirement Benefits Appeals Tribunal in October 2012, but the tribunal arrived at the same conclusion in a February 2017 judgment.

This prompted the pensioners to institute a judicial review application seeking an order to quash the tribunal’s decision and prohibit its enforcement, but the High Court in August 2023 dismissed the judicial review.

The pensioners then rushed to the Court of Appeal, which in December 2024 allowed the appeal and directed the Retirement Benefits Appeals Tribunal to rehear the matter.

Originally, the case involved 948 former Telkom Kenya employees who complained of underpayment, but 348 withdrew in January 2025 after the Court of Appeal sent the case back to the tribunal for a rehearing.

The pensioners sought Sh18 billion payment over and above the pension they were paid after retirement, a claim the scheme, with about 9,000 pensioners, said would cause its collapse.

RBA told the tribunal that its review showed that only two pensioners had been underpaid by Sh32,629 and Sh20,816 and dismissed the 600 pensioners’ complaint that all of them had been affected.

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