Standard Chartered Bank Kenya has said it is readying itself to settle a Sh7 billion payout to hundreds of its former employees after it lost a 16-year suit at the Supreme Court over the miscalculation of their pension.
The 629 staff successfully petitioned the court that their pension savings were undervalued when the bank’s scheme converted to a defined contribution from a defined benefit.
StanChart said it was prepared to settle the billions, arguing that it has adequate financial buffers to settle the multi-billion-shilling claim.
The expected Sh7 billion payout represents 86.6 percent of the lender’s Sh8.08 billion half-year net profit to June 2025 and is 50 percent of the bank’s Sh13.9 billion record dividend it paid last year.
“We have initiated a structured process to execute the judgment in accordance with the legal requirements and are committed to maintaining open communication with affected pensioners,” said the bank in a statement on Monday.
“We would like to assure our clients and stakeholders that we are adequately capitalised to meet the anticipated obligations.”
StanChart remains well capitalised, having ended six months to June with a core capital of Sh56.2 billion.
The bank has, however, initiated a fresh challenge at the High Court in Nairobi, whose hearing is set for today, and which could delay the payment of benefits to the pensioners.
Last week, the Supreme Court cited the lack of jurisdiction on the bank’s application for a stay of execution, saying the matter did not concern the interpretation of the Constitution.
"The mere allegation of constitutional violations cannot bring the appeal within the ambit of this court's jurisdiction under Article 163(4)(a). Based on the foregoing, it is clear to us that this court lacks jurisdiction to hear and determine the intended appeal and the application for stay attendant thereto," the Supreme Court judges said.
The bank, alongside its trustees for the Pension Fund and Staff Benefits Scheme, wanted the apex court to suspend enforcement of the judgment and decree by the Retirement Benefits Appeal Tribunal delivered in favour of the former employees, some of whom retired in the 1990s.
DC schemes are becoming more popular among Kenyan employers because their costs are predictable, unlike DB schemes.
Under DC schemes, the employer pays contributions but does not make any pension promise.
The size of the pension pot paid when the member retires depends on the size and frequency of contributions and the capital markets. Under DB, members are promised a certain portion of their salaries when they retire. The sponsor or the employer must honour this promise no matter how the markets fare.
The parties moved to the Supreme Court after the Court of Appeal dismissed their appeal in March this year, upholding a 2023 decision of the High Court to back the tribunal's ruling dated April 28, 2022, on the payout.
