By Andrew Kariuki

The Supreme Court has dismissed a petition filed by the Association of Retirement Benefits Schemes seeking to stop the application of public procurement laws to pension schemes linked to public institutions.

In the case, the association challenged Section 2(o) of the Public Procurement and Asset Disposal Act (PPADA), which classifies pension funds belonging to public entities as public entities for purposes of procurement and disposal procedures.

The association argued that retirement benefit schemes are independent trusts registered under the Retirement Benefits Act and should not be treated as government institutions simply because they are sponsored by public employers.

According to court documents, the petitioners maintained that pension funds consist of contributions made by both employers and employees for retirement purposes and are managed separately through trustees on behalf of members.

The association further claimed that subjecting public pension schemes to procurement regulations had created operational difficulties and additional financial obligations that could negatively affect retirees and beneficiaries.

They also argued that the law was discriminatory because pension schemes linked to public institutions were subjected to procurement requirements while private pension schemes operating under the same retirement framework remained exempt.

The Attorney General, the National Treasury, the Public Procurement Regulatory Authority and other state agencies opposed the petition, insisting that pension funds associated with public institutions involve public interest and public accountability.

The government argued that public pension funds must comply with procurement laws to ensure transparency, fairness and protection against mismanagement or misuse of funds.

In its judgment, the Supreme Court noted that Article 227 of the Constitution requires procurement involving public entities to be conducted through systems that are fair, equitable, transparent, competitive and cost-effective.

The court observed that Parliament enacted the Public Procurement and Asset Disposal Act specifically to give effect to constitutional principles governing accountability in the use of public-related funds.

The matter originated from High Court Petition No. 170 of 2016 before proceeding to the Court of Appeal and eventually reaching the Supreme Court.

The ruling is expected to affect how pension schemes linked to public institutions conduct procurement, tendering and disposal of assets moving forward.