Unremitted Sh40b pension cash raises concerns, says RBA

The Retirement Benefits Authority (RBA) has revealed that unremitted pension contributions, which were deducted by employers from employees but not remitted to the scheme, have surged to Sh40 billion.

The authority warns that this situation poses a significant challenge to thousands of Kenyan workers who may find themselves without access to their benefits upon retirement.

Caroline Wabwire, the Deputy Director of Supervision at RBA, sounded a warning directed at county governments, parastatals, and universities, which she noted have been notorious for defaulting on these contributions.

She spoke in Mombasa during the ongoing Zamara convention, in an event that convened trustees of retirement schemes to discuss pension-related matters under the theme “Safeguarding Futures.”

Public sector schemes

“Approximately Sh40 billion remains outstanding, particularly in public sector schemes. It’s worth noting that this amount could fluctuate since we are reporting the actual sum without factoring in the interests that would be payable for the period during which these contributions have remained unpaid,” Wawire said.

She said that after engaging the National Treasury and National Assembly the plan 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,” said Wabwire.

Consultations are underway to engage the Kenya Revenue Authority (KRA) as the debt collector agent on behalf of the scheme, however, she says, this must be anchored in the law given to KRA.

Embracing technology

“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 the pension trustees to embrace technology and especially artificial intelligence to foster security of pension contributions. He challenged Kenyans in the informal sector to save for retirement.

“To maximize 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,” said Olubayi.

According to statistics,there are 1076 registered schemes with a 7.1 million membership.

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