diff --git a/entrypoint-user.sh b/entrypoint-user.sh
index fa72e84..b2a1808 100755
--- a/entrypoint-user.sh
+++ b/entrypoint-user.sh
@@ -86,9 +86,35 @@ if command -v pi &>/dev/null; then
 
   # Bootstrap settings.json from template if absent (pi rewrites this
   # file at runtime — lastChangelogVersion, etc — so we can't symlink it).
-  if [ ! -f "$HOME/.pi/agent/settings.json" ] && \
-     [ -f /opt/pi-toolkit/settings.example.json ]; then
-    cp /opt/pi-toolkit/settings.example.json "$HOME/.pi/agent/settings.json"
+  _pi_settings="$HOME/.pi/agent/settings.json"
+  _pi_template=/opt/pi-toolkit/settings.example.json
+  if [ ! -f "$_pi_settings" ] && [ -f "$_pi_template" ]; then
+    cp "$_pi_template" "$_pi_settings"
+    echo "pi settings.json bootstrapped from template"
+  elif [ -f "$_pi_settings" ] && [ -f "$_pi_template" ] && \
+       [ "${PI_SETTINGS_MERGE:-1}" != "0" ] && command -v jq >/dev/null 2>&1; then
+    # Non-destructive merge: a settings.json on a PRESERVED volume never
+    # otherwise sees new template keys (the bootstrap above only fires when
+    # the file is absent), so config added in an image upgrade — e.g. the
+    # observational-memory / pi-fork blocks or a newly-enabled model — never
+    # reaches existing users. Deep-merge with the template FIRST and the
+    # live file SECOND ('.[0] * .[1]') so the user's values always win and
+    # only keys MISSING from the live file are filled in from the template.
+    # Arrays are treated as leaves (the user's array is kept verbatim, so a
+    # model they deliberately removed is not re-added). Only rewrite when the
+    # merge actually changes something, and back up the original first.
+    # Set PI_SETTINGS_MERGE=0 to disable. Invalid JSON on either side → skip,
+    # never clobber.
+    if _pi_merged=$(jq -s '.[0] * .[1]' "$_pi_template" "$_pi_settings" 2>/dev/null); then
+      if [ -n "$_pi_merged" ] && \
+         ! printf '%s' "$_pi_merged" | jq -e --slurpfile cur "$_pi_settings" '. == $cur[0]' >/dev/null 2>&1; then
+        cp "$_pi_settings" "${_pi_settings}.bak.$(date +%Y%m%d-%H%M%S)"
+        printf '%s\n' "$_pi_merged" > "$_pi_settings"
+        echo "pi settings.json: merged new template keys from settings.example.json (backup saved)"
+      fi
+    else
+      echo "WARN: pi settings.json merge skipped (jq could not parse template or live file; left untouched)"
+    fi
   fi
 
   # pi↔mempalace MCP bridge — single extension symlink.
diff --git a/scripts/recreate-sanity-check.sh b/scripts/recreate-sanity-check.sh
index 41dff1d..57b9dbd 100755
--- a/scripts/recreate-sanity-check.sh
+++ b/scripts/recreate-sanity-check.sh
@@ -187,6 +187,18 @@ else
   fail "~/.pi/agent/settings.json missing"
 fi
 
+# settings.json merge: the entrypoint deep-merges new template keys into a
+# preserved settings.json on every start, so config added in an image upgrade
+# (e.g. the observational-memory / pi-fork blocks) reaches existing volumes.
+# Assert those blocks are present and that the file is still valid JSON.
+if command -v jq >/dev/null 2>&1 && [ -f "$HOME/.pi/agent/settings.json" ]; then
+  if jq -e 'has("observational-memory") and has("pi-fork")' "$HOME/.pi/agent/settings.json" >/dev/null 2>&1; then
+    pass "settings.json has observational-memory + pi-fork blocks (template merge)"
+  else
+    fail "settings.json missing observational-memory and/or pi-fork blocks (template merge did not land)"
+  fi
+fi
+
 # pi package registrations (pi install <local-path> → recorded in settings.json)
 if [ -f "$HOME/.pi/agent/settings.json" ]; then
   for pkg in pi-fork pi-observational-memory; do