This lower payout occurred when the bank converted its defined benefit pension scheme, where only the employer makes retirement contributions on behalf of staff, to a defined contribution scheme — where both employers and employees make contributions.
The aggrieved former employees filed a lawsuit in June 2009.
But it was not until 2018, nine years later, that the case moved forward.
The Employment and Labour Relations Court recused itself from the case, asking the former bank staff to pursue and exhaust alternative dispute resolution mechanisms first.
In May 2020, the staff first filed a complaint with the chief executive officer of the Retirement Benefits Authority (RBA).
The filing revealed the crux of the dispute and provided clues as to how StanChart and its pension fund might have mistakenly understated payouts to former employees.
In their filing, the 629 former employees claimed that the bank had failed to factor in cost-of-living adjustments, housing allowances, and future payout increases into its calculations.
The bank was also accused of receiving surpluses totalling Sh1.536 billion in December 1997, in violation of trust deeds and rules.
In April 2021, the RBA chief executive sided with the bank, which had dismissed the complaint, setting the stage for a fresh fight at the regulator’s tribunal.
The tribunal took up the matter, dismissing the bank’s doubts over its jurisdiction.
Following deliberations and correspondence between the aggrieved parties, the 629 employees convinced the tribunal of missteps that included variations to actuarial rules.
“We therefore find that the information made available to the appellants was misleading since the respondents allowed them to believe that the only factors that would determine the cash equivalent values of their accrued pensions were those published in the booklet of January 1996,” reads the tribunal ruling.
“However, the respondents used new factors that led to a reduction of their benefits. This tribunal is persuaded that there was misrepresentation, concealment, and non-disclosure of the actual actuarial factors the respondents intended to use in the calculations of the appellants at the time material to this dispute.”
The tribunal further qualified the 629 former employees’ allegations, including the lack of cost-of-living adjustments, the exclusion of the housing allowance component, entitlement to future increases in pension payments, and the unprocedural transfer of surpluses to Standard Chartered Bank Kenya.
The tribunal ordered the lender to recalculate lump sum benefits and pay the difference to the former employees, with interest accruing until full payment is made.
StanChart was also asked to refund Sh1.1 billion of surpluses paid to it by its staff retirement benefit scheme.
“The respondents are hereby ordered to re-calculate and pay the appellants' lump sum benefits (commuted lump sum and pension), taking into account the correct actuarial factors, cost-of-living adjustments, housing allowance, and future increases in payments,” the tribunal ruled.
Back to the courtroom
Dissatisfied with the tribunal's verdict, StanChart took the matter to the courts, propelling the dispute through the High Court and Court of Appeal.
Both courts would, however, uphold the findings of the tribunal.
In early September 2025, after 16 years of legal disputes, the Supreme Court finally ruled that it lacked jurisdiction to hear the case, thus upholding the decisions of the lower courts.
Without further recourse, the bank had to pay up and will begin processing claims arising from the judgment on September 22, 2025.
According to recent court filings, the expected payout is estimated at Sh7 billion, prompting the bank to issue a profit warning in its expected financial statements for the year.
“Standard Chartered Bank Kenya Limited projects that profit after tax for the year ending December 31, 2025 will be potentially 25 percent lower than net earnings for the year ended December 31, 2024, primarily due to the judgment of the Retirement Benefits Appeals Tribunal Appeal No.8 of 2021 dated April 28, 2022, and the directions in respect to the computations to be paid out to the appellants issued by the tribunal on May, 22, 2025,” the bank said on Tuesday.
The bank could not disclose the exact amount to be paid out, as it is currently in a financial closed period.
The lender is, however, expected to make substantive disclosures on the payout when it reports earnings for the first three quarters of the year on November 19.
New pension claims
The lender is also caught in a fresh tussle over a last-minute request by a group of 325 former employees to be included in payments for past undervalued pensions alongside their 629 colleagues who won a tribunal suit against the lender for their dues.
The former workers, who describe themselves as the “Non 629 Former Employees” in reference to those who were part of the tribunal suit, said in a letter to the bank dated June 5 that they were also in service at the time its pension scheme was changed from a defined benefit to a defined contributory scheme in 1999.
“Although we were not part of the original group of claimants, we were similarly situated as employees of the bank and members of the same schemes during the period in question. The utilisation of pension funds affected all members of the schemes in equal measures,” they said in their letter, which was addressed to the bank and its pension scheme.
“In the spirit of fairness and equity, we respectfully request that we and the Non 629 Former Employees be included in the compensation process under the same terms as those granted to the 629 claimants by the tribunal.”
In its response dated August 19, StanChart told the 325 claimants that their request lacked merit under the law, adding that the matter was before the Supreme Court at the time.
“We have reviewed the allegations set out in your letter and have concluded that the claims asserted in your letter lack any merit in law or fact ... Furthermore, irrespective of the outcome of the appeal, the judgment issued by the RBAT is only in respect to the parties in the proceedings before them,” StanChart said in its letter.
“Accordingly, we vehemently deny any and all liability as asserted in your letter. Please note that any action brought against the bank or the scheme shall be strenuously defended at your peril in respect to resultant costs.”
