The Supreme Court has declared unconstitutional a key provision of the Public Procurement and Asset Disposal Act (PPADA) that subjected pension schemes sponsored by public entities to government procurement rules, ruling that workers’ retirement savings are private funds and not public money.
In a landmark judgment delivered on May 15, 2026, the apex court allowed an appeal filed by the Association of Retirement Benefits Schemes, overturning decisions of both the High Court and the Court of Appeal. The court declared that Section 2(o) of the Public Procurement and Asset Disposal Act is inconsistent with Article 227(1) of the Constitution and is therefore void to the extent that it classifies pension funds established by public entities as public entities required to comply with public procurement laws.
The dispute stemmed from the enactment of the 2015 procurement law, which expanded the definition of public entities to include pension funds established by public institutions. The Association of Retirement Benefits Schemes challenged the provision, arguing that pension schemes are private trusts established for the benefit of employees and should not be subjected to procurement procedures designed for government institutions.
Both the High Court and the Court of Appeal dismissed the petition, finding that pension schemes linked to public entities perform public functions and are therefore subject to procurement oversight. However, the Supreme Court disagreed, holding that regulation by the Retirement Benefits Authority (RBA) does not convert a private trust into a public entity.
“The mere fact that an entity performs functions of public interest or is regulated by the State does not, without more, clothe it with the character of a public entity,” the judges ruled.
The court found that once employers and employees remit pension contributions into a retirement benefits scheme, the money ceases to be public funds and becomes private savings held in trust exclusively for the benefit of employees. The judges emphasized that trustees, fund managers, administrators and custodians of pension schemes do not perform government functions, are not paid from the Consolidated Fund, and derive their authority from trust deeds established under the Retirement Benefits Act rather than from the State. The court further observed that accepting the argument that pension funds are public money simply because a public employer contributes to them would produce an absurd outcome, effectively implying that an employee’s salary would also become public money after being paid.
According to the judgment, Article 227 of the Constitution governs procurement by State organs and public entities using public funds and was never intended to regulate privately held retirement savings.
The Supreme Court also faulted the Court of Appeal for concluding that all retirement benefits schemes are public entities merely because they are regulated by the Retirement Benefits Authority.
“The role of regulation or supervision does not change the character of a private enterprise into a public entity contemplated under Article 227 of the Constitution,” the court stated.
The judges were equally critical of the Retirement Benefits Authority for reversing its position during the appeal. While the Authority had supported the Association’s case before the High Court and the Court of Appeal, it changed its stance before the Supreme Court and defended the constitutionality of the impugned law. The court described the regulator’s change of position as “surprising” and “appalling,” noting that it had abandoned sworn evidence previously filed in support of the retirement schemes.
In allowing the appeal, the Supreme Court set aside the judgments of the High Court and the Court of Appeal and declared that pension funds sponsored by public entities are not public entities for purposes of public procurement law.
The ruling means trustees of public sector retirement schemes will no longer be required to follow government procurement procedures when procuring goods and services for their members, bringing to an end what the retirement benefits industry had argued were costly and unnecessary compliance obligations that diminished members’ savings.
