The National Treasury is seeking to rescue pension funds choking from non-remittance of workers contributions which stood at a staggering Kshs 36,284,729,685 by March 2023.
- High wage bills and cash flow constraints in the counties for instance have contributed to this enormous debt affecting schemes including LAPTRUST Defined Benefits Scheme, the County Pension Fund, and the CPF Individual Pension Scheme.
- Despite various recovery strategies including property swaps, sponsor engagement, and debt repayment plan negotiations, the debt continues to rise.
- On Friday the National Treasury Cabinet Secretary John Mbadi appointed a multi-Agency Taskforce on non-remittance of pension deductions to pension scheme by county governments to be chaired by Albert Mwenda, Director General budget, fiscal and economic affairs at the National Treasury.
“The object of the appointment of the Taskforce is to actualize the Government’s commitment on the timely remittance of pension deductions to pension schemes by county government entities,” Mbadi said.
The taskforce will serve for two months to establish the actual county pension liabilities, develop strategies for the implementation of the recommendations of the Senate Select Committee on County Public Investments and Special Funds; and develop appropriate formula and framework for payment of liabilitie.
In an earlier meeting, the County Pension Fund (CPF) had proposed a Special Bond issuance by the National Government to settle the debt, which could then be recovered from the counties’ allocated revenue, proportional to their owed amounts.
This would require legislative action, and CPF is additionally offering an interest and actuarial deficit waiver to counties ready to settle the debt more rapidly.
In the 2018/2019 budget speech, National Treasury Cabinet Secretary also proposed amendments to the Retirement Benefits Act to ensure timely submission of statutory reports and remittance of contributions.
“In order to compel employers to remit the pension contributions, I propose to amend the Retirement Benefits Act to enable the Authority intervene against any employers who fails to remit such contributions to the scheme.” the then CS said at the time.
