The government has assured that outstanding pension payments owed to retirees of leased sugar companies will be paid. It has acknowledged specifically that employees at Chemelil, Nzoia, and Sony sugar companies, including retirees, have faced significant delays in receiving their rightful dues.

Speaking to People Daily on the fate of former Chemelil Sugar Company employees who are owed close to Ksh238.6 million in unremitted pension contributions, Retirement Benefits Authority (RBA) chief executive Charles Machira oozed confidence that they will soon be paid.

“We have engaged with all three schemes and our position is that in the lease agreement entered into between the government and the investors, liabilities going forward are with the new owners of the sugar factories,” he said.

“But to the extent of the date of the lease coming backwards, the government will take over the liability with a view to funding those schemes,” Machira added.

Machira noted that in Chemelil Sugar Company, one of the liabilities that has been recognised is the debt owed to the pension scheme, which is documented.

“There is a commitment that all the liabilities that were owing prior to the transfer of the ownership belong to the Government of Kenya,” he stated.  

Machira allayed fears that the case of Chemelil Sugar retirees could end up like their counterparts from the Pyrethrum Board of Kenya and Kenya Railways, who are facing significant hardships due to delayed or unpaid pension benefits, leaving them in poverty and struggling to meet basic needs.  

“This is because governments work with plans. This issue of sugar factories, leasing and everything is something that has gone through the due process, the numbers and cost are known, and they will be financed,” he said.

The assurance comes at a time when anxiety has hit hundreds of pensioners in the sugar belt region, with the clock ticking on the final handover of four state-owned firms to private owners.

Amid worry and uncertainty, the retirees pray every day and “hobble on” in the hope of an intervention by the government.

Private owners

“The silence of the government is making the retirees feel like someone is sticking a knife through their hearts as the private owners take full control of their former workplace,” said Joseph Oruko, a representative of the retired members of Chemelil Sugar Company Staff Retirement Scheme (Chemelil SRBS).

The government has been emphatic that its involvement with the sugar firms, where it has been the major shareholder, will end with the last payment of salaries on June 30, 2026.

It has leased four troubled state-owned sugar companies for a period of 30 years in what the Agriculture Ministry says is meant to support the revival of the sugar sub-sector.

The four are Chemilil Sugar Company, awarded to Kibos Sugar & Allied Industries Ltd, Nzoia Sugar Company, awarded to West Kenya Sugar Company, Sony Sugar Company, awarded to Busia Sugar Industry Ltd and Muhoroni Sugar Company, leased to West Valley Sugar Company Ltd.

According to Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe, under the agreement, the government will settle arrears owed to both farmers and workers before the handover of the factories to private owners.

Speaking to People Daily, Oruko said the government appears to have turned a blind eye to the fate of retirees whose pension contributions were deducted but were not remitted to the staff retirement scheme as required under the Retirement Benefits Act.  

“Just as it has pledged to settle salary arrears, pension contributions, and statutory deductions up to the handover date, the government must come out and state its stand on the retirees who are now facing significant financial struggles due to the unpaid pension benefits and the rising cost of living,” he said.

“The retirees fear that the new lessee might discontinue any plan to pay the unremitted pension contributions, further complicating their situation, already made worse by poverty and inadequate healthcare,” Oruko stated.

Shadrack Ng’eny, a kidney patient, is one of the retirees who continue to suffer from the ignominy of retiring almost empty-handed because of an employer who failed to remit monthly deductions to staff the pension scheme.

A retired member of Chemelil SRBS, Ng’eny, who has been on dialysis treatment since November 2022, says he has not been paid his benefits despite struggling with the financial burden.

“My biggest problem is transport, which is very expensive. From Eldama Ravine to Eldoret every Tuesday and Friday,” he told members of the Chemelil retirement benefits scheme last month in a communication seen by People Daily.

According to Oruko, the fight to get their unpaid benefits has been a long-drawn-out process involving RBA, Chemelil SRBS Board of Trustees and the unpaid retired members of the scheme.

In one of the letters addressed to Chemelil Sugar Company Managing Director and copied to RBA, the scheme chairperson, Esther Ngetuny, reminded the management it proposed a remedial action plan (RAP) that intended to eliminate the deficiency in the scheme fund of Ksh252,485,552.39 within four years, commencing March 2022 to January 2026.

“Through the RAP, a total of Ksh16,425,443.40 has been remitted to clear part of the outstanding balance of Ksh252,485,552.39. To date, a total of Ksh238,577,143.70 is yet to be remitted as per the payment plan,” the letter dated June 6, 2024, says in part.

Ngetuny, however, noted with concern the management’s failure to honour their commitment to clearing the outstanding scheme funds so that members and retirees could receive their benefits from the scheme and comply with the RBA regulations on collection and remittance of the members’ contributions.

“We, therefore, make an appeal to the management to make a one-off payment of Ksh114,178,103.99 in compliance with RAP and continue with a payment plan of Ksh5,475,147.80 per month forthwith,” she says in the letter.

Earlier this year, the unpaid retirees sent another letter to the Chemelil SRBS Board of Trustees chairperson and copied it to the managing director.

The retirees said that it came out clearly during the scheme’s Annual General Meeting (AGM) of December 3, 2024, that the unremitted pension contributions were not factored into the government’s undertaking to pay workers’ dues, owing to the impending leasing of the company.

They said this was confirmed when part payment of the salary arrears was released by the government in December 2024, but unremitted pension contributions were not catered for.

“It also came to the attention of members that the Sponsor is not committed to the Remedial Action Plan (RAP) signed with the Retirement Benefits Authority. For more than two years now, they have not honoured payments despite efforts made by trustees requesting for resumption of monthly remittance as agreed in the Remedial Action Plan,” the retirees stated in the letter dated February 14, 2025.

Breach of the law

According to the retirees, in the circumstance where the Sponsor of the scheme is in wilful breach of the law and defiant to their own commitment, the Board of Trustees have a clear recourse in the law (Retirement Benefits Act of Kenya No.3 of 1997, Section 53B- Power to recover unremitted contributions).   

“We hereby demand that the Board of Trustees immediately commence action by seeking approval from the Retirement Benefits Authority to enable them to call in the Kenya Revenue Authority for assistance in recovering the unremitted pension contributions as stipulated in the Act,” they stated in the letter.

“We hope that you will act in the best interest of the members of the scheme, particularly the suffering retirees. This is very urgent now, considering the leasing process has formally started.”

According to Oruko, although the retirees gave the Board of Trustees 21 days to respond to the letter, nothing much has happened even as the clock ticks towards the date the 30-year lease of the company officially kicks in.