A recent Supreme Court decision marks a new era in procurement by public pension funds, coupled with the need for enhanced governance of these schemes.
Article 227(1) of the Constitution was enacted to ensure procurement of all goods and services by public entities is undertaken through a system that is fair, equitable, transparent, competitive and cost-effective.
Parliament brought this article to life by enacting the Public Procurement and Asset Disposal Act 2015. One of the key features of this Act was the inclusion of pension schemes sponsored by public entities within the definition of ‘public entity’.
The Act defines public procurement as the sourcing of goods and/or services by a public entity using public funds. It is the definition and classification of publicly sponsored pension schemes as public entities, and therefore subject to the Act, that led to the Association of Retirement Benefits Schemes filing a petition against the Attorney General, Treasury Cabinet Secretary, the Public Procurement Regulatory Authority, and the Retirement Benefits Authority.
By its judgment dated March 9, 2017, the High Court held that pension schemes associated with public entities qualify as public bodies under the Public Procurement and Asset Disposal Act, 2015. Among the reasons for the court’s finding was that such schemes perform functions of public importance and nature, and the presence of deep and pervasive State control, regulation and supervision.
The court further held that there was nothing unconstitutional with the classification of public entity-sponsored pension schemes as public entities and hence having them subject to the provisions of the Public Procurement and Asset Disposal Act 2015. By a judgment dated April 28, 2022, the Court of Appeal upheld the High Court’s judgment.
By its majority judgment dated May 15, 2026, the Supreme Court entertained no doubt that a pension scheme sponsored by a public entity was not contemplated in the enactment of Article 227 of the Constitution to be an entity that was intended to partake in procurement and thereby to be bound by the provisions of the Public Procurement and Asset Disposal Act 2015.
In so doing, the court ruled that the legislature exceeded its mandate in so bringing the schemes within the fold of the procurement Act. The court hence set aside the judgment of the Court of Appeal and declared Section 2(o) of the Public Procurement and Asset Disposal Act 2015 inconsistent with Article 227(1) of the Constitution and, therefore, void to the extent that it subjects pension funds for a public entity to the application of public procurement systems.
The Supreme Court’s findings that public sector workers’ pension funds are irrevocable private trust funds established under the Retirement Benefits Act and therefore not subject to the application of the Public Procurement and Asset Disposal Act 2015, in my view, is a laudable finding that appropriately aligns with the law.
The judgment restores the much-needed autonomy of the publicly sponsored pension schemes if they are to evenly be compared with the privately sponsored one while still remaining regulated under the Trustees Act, the Retirement Benefits Act, and attendant Regulations under the oversight of the Retirement Benefits Authority.
The framework remains robust enough and faithfully complied with and enforced should guarantee transparency, accountability and sustainability in the running of the schemes in guaranteeing member interests.
The decision further brings good tidings for example it may enable trustees not subject to the hitherto administrative bureaucracies and costs in procurement, to be a little bit more responsive for enhanced investment decisions.
Despite the good tidings above, it is worth noting that delinking the said schemes from the application of the public procurement law does not in any way incentivise non-compliance with general procurement principles and sustainable practices or legal and fiduciary responsibility to safeguard fund assets, ensure that the schemes remain financially sound, and act exclusively in the best interests of members and beneficiaries.
They must rigorously comply with the RBA regulations and the scheme’s Trust Deed and Rules.
If anything, the Supreme Court decision creates heightened expectations for enhanced oversight on matters procurement in public entity sponsored schemes, a kiss of death so to speak if taken as window for abuse or trustee aggrandisement.