NAIROBI, Kenya – The government’s cost of paying civil servants who opt for early retirement surged to Sh1.57 billion in the year ending June 2025, underscoring a growing wave of voluntary exits from public service amid pressure to rein in the wage bill.
The amount, recorded as a liability for voluntary retirement packages, represents a 73.8 per cent increase from Sh905.88 million the previous year, according to Treasury financial disclosures covering 570 State corporations, semi-autonomous agencies and public funds.
The liabilities reflect commitments to employees who accepted early retirement offers but had not yet been paid by the close of the financial year.
Such schemes are typically used to ease payroll pressure, reorganise departments or eliminate overlapping roles without resorting to compulsory layoffs.
While Treasury did not disclose how many officers took early retirement during the period, Public Service Commission (PSC) data shows that overall exits from public service remain significant.
Out of 231,830 public officers, 8,411 left service during the year to June 2024. Of these, 5,260 exited through retirements or the end of contracts, while 3,138 left through resignations, dismissals or death. Resignations accounted for a relatively small share, just 3.6 per cent of total exits.
State corporations recorded the highest number of departures at 4,505, followed by ministries and State departments with 2,129 exits, and public universities with 1,160.
Employees who take up voluntary retirement are entitled to severance packages calculated on factors such as length of service, salary and negotiated benefits.
The rising cost of early exits comes against the backdrop of a ballooning public wage bill.
Treasury data shows that employee costs across State entities climbed to Sh223.47 billion in 2025, up from Sh211.12 billion a year earlier.
Basic salaries for permanent staff rose to Sh168.44 billion from Sh160.83 billion, while personal allowances increased to Sh10.69 billion from Sh9.34 billion. Wages for temporary staff also edged up slightly to Sh2.59 billion.
The Sh1.57 billion set aside for early retirement appears on balance sheets as a liability, with many institutions spreading payments over time to manage cash-flow constraints.
Overall employee benefit obligations — which include accrued salaries, leave, bonuses and long-term pension commitments — grew to Sh22.05 billion from Sh20.82 billion.
Treasury figures further show that nearly a third of State entities, 165 out of 570, ended the year in deficit, spending more than they earned — a signal of the strain employee-related obligations continue to place on public finances, even as the government looks to voluntary exits to contain costs.
