Employers owe Sh40b in unremitted pension cash

Employers are on the spot for failing to remit employees’ monthly statutory deductions to pension schemes which now stand at Sh40 billion.

Caroline Wabwire, Deputy Manager, Supervision at Retirement Benefits Authority (RBA) said the move spells doom to thousands of Kenyans who face retirement without accessing their contributions.

She identified a section of county governments, parastatals and universities as among employers who are notorious for defaulting, thereby jeorpadizing the lives of employees after their retirement.

Wabwire made the remarks in Mombasa during Zamara Trustees Convention 2023 in Mombasa. The three-day event brought together trustees of retirement schemes to deliberate about pensions, under the theme “Safeguarding Futures”.

“Approximately Sh40 billion is outstanding, from public sector schemes, this amount could vary because we are reporting actual amount without factoring interests which will be payable for the period in which the money has been unpaid,” she said.

Wabwire said the new plan after engaging National Treasury and National Assembly is to have all non-remitted contributions deducted at source so that they are remitted to schemes before the money is directed to the employer accounts.

 “One of the biggest challenges in is the non-remittance of contributions; our law provides that when contributions are deducted must be remitted within 10 days before end of the financial year that has not been the case in public institutions like universities, county governments and some of the parastatals have not been compliant,” she added.

Debt collector

Wabwire disclosed that consultations are underway to engage Kenya Revenue Authority (KRA) as the debt collector agent on behalf of the schemes. However, she added that this must be anchored in the law to give the taxman powers to do so.

“The law was amended to allow KRA to become the debt collector, but KRA had concerns over its implementation, but currently discussions are underway to incorporate the suggestions KRA had brought to allow them to get powers of collecting the dues,” she said. Zamara executive director James Olubayi challenged pension trustees to embrace technology and especially artificial intelligence to foster security of pension contributions. He also challenged Kenyans in the informal sector to save for retirement.

“To maximise returns and ensure pension safety we encourage adoption of high-tech technology like the artificial intelligence (AI). This will instill contributor confidence and continue to attract many contributions,” he said. According to statistics, there are 1,076 registered schemes in the country with 7.1 million members.

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