Kenya is sitting on a social security time bomb following systemic failures by public sector employers to remit statutory deductions to pension schemes.
- •A significant proportion of unpaid bills by state corporations, which totalled KSh 379.8bn by June 2024, is owed to pension schemes, contractors, and tax obligations.
- •County Governments have also been accumulating pension bills due to, among other reasons, non-remittance of deductions from staff salaries.
- •As at 31st October, 2024, the total outstanding pending bills reported by the Retirement Benefits Authority (RBA) amounts to Ksh 91bn, an increase from Ksh 73.4bn a year before.
“Some County Governments have not included these pension liabilities in their inventory of pending bills. Therefore, County Governments should assess these pension liabilities and ensure accurate recording in their inventory of pending bills for prioritization of payment,” Treasury says in the draft 2025 Budget Policy Statement.
Over the years, these bills, including related penalties, have escalated to levels that pose financial risks to County Governments in meeting their financial obligations. Their absence from debt stock inventories also means that they risk not being prioritised, despite the looming risk of retirees not getting their benefits on time, if at all.
The government has formed a taskforce to assess liabilities and create payment frameworks for county governments. This comes at a time when the pensions regulator is set to implement amendments to pension laws. This include raising the tax deductible contribution limit to KSh 360,000 annually, and KSh 180, 000 for post-retirement medical funds.