The Retirement Benefits Authority (RBA) has introduced new initiatives to tackle the rising problem of unpaid pension contributions, including stricter penalties and measures that could prevent defaulting institutions from accessing government funds.

Under the reforms, the Kenya Revenue Authority (KRA) will take a leading role in monitoring and recovering unremitted pension contributions.

According to RBA data, pension deductions that were collected but not forwarded to retirement schemes totalled Ksh72 billion by June 2025, up from Ksh57 billion the previous year, marking a 26.31 per cent increase.

The majority of these unpaid contributions, nearly 98 per cent, are linked to county governments, cash-strapped public universities, sugar factories, and other quasi-government agencies.

In its policy proposal, RBA seeks to reintroduce the statutory clearance mechanism, meaning that sponsors can only access funds from the National Treasury after proving full compliance with pension obligations.

“The RBA proposes to reinstate the statutory clearance mechanism whereby sponsors may only access disbursements or statutory funds upon proof of full compliance with remittance obligations to pension schemes,” the document reads.

According to a notice published on My Gov on Tuesday, February 17, 2026, the authority is also pushing for the power to directly recover outstanding contributions, including the ability to issue garnishee orders.

Proposed changes to the KRA Act would enable tax authorities to issue agency notices and freeze the bank accounts of employers who fail to remit pension deductions.

Moreover, the RBA plans to make accounting officers personally accountable for any defaults while increasing penalties and interest charges for non-compliance.

The pension authority attributed the surge in unremitted contributions to poor discipline in the public sector.

“Reinstate the statutory clearance mechanism whereby sponsors may only access disbursements or statutory funds upon proof of full compliance with remittance obligations to pension schemes,” the proposals read in part.

“Empower the Authority to enforce direct recovery of unremitted contributions from defaulting sponsors, including by way of garnishee orders. Impose personal liability on accounting officers of sponsors for failure to remit; and enhance penalties and interest provisions to serve as an effective deterrent.”

Currently, penalties for late remittance stand at Ksh20,000 or 5 per cent of the outstanding amount per month, whichever is higher.

The rapid rise in non-remitted contributions highlights that current fines have failed to discourage defaults.

The RBA management first raised the alarm in September 2025, blaming misuse of funds meant for salaries and wages for the growing backlog.