NAIROBI, Kenya – Thousands of civil servants, teachers and police officers have lost out on billions of shillings in potential pension earnings due to the government’s persistent failure to remit their contributions on time, a new audit shows.
Auditor General Nancy Gathungu, in her latest review of the Public Service Superannuation Fund (PSSF), warns that delays in forwarding statutory deductions continue to erode retirement savings, even as the fund’s asset base surged to a historic Sh242 billion in the year ending June 2025.
According to the report, the government owed the fund Sh10.6 billion during the period under review—money representing both employer and employee deductions that were removed from payslips but not transmitted as required by law.
While Sh9.38 billion of the amount was eventually remitted after the fiscal year closed in August 2025, Sh1.22 billion remained outstanding.
Gathungu cautioned that the delays violate the Public Service Superannuation Scheme Act of 2012, which requires remittance within 10 working days after the end of the month.
“Unless the outstanding balance is paid together with the penalty provided for under the Act, contributors stand to lose returns that would have been earned had the contributions been received in time,” the Auditor General said.
She added that late remittances deny the fund an opportunity to invest members’ money promptly, leading to long-term financial losses.
“In the circumstances, the management was in breach of the law,” she noted in the report signed in September 2025.
Strong Growth, Deep Governance Flaws
Despite the compliance issues, PSSF chairman Hussein Dado reported significant growth, highlighting a 70.4% rise in the fund’s size from Sh142 billion to Sh242 billion.
Investment income also rose sharply by 80.5%, hitting Sh25.3 billion, driven by gains in government securities, equities and offshore investments.
However, the audit paints a troubling picture of governance lapses within the fund.
The board of trustees breached the constitutional gender requirement, with 77% of members being male.
It also exceeded the number of meetings permitted under a 2020 circular—holding 11 board sessions and seven committee meetings—without evidence of approval from the Cabinet Secretary.
“Management did not provide evidence of approval of the extra meetings by the Cabinet Secretary,” the report states.
Data Weaknesses and Legal Breaches
The Auditor General also faulted the fund for failing to fulfil the legal requirement reserving 5% of jobs for persons living with disabilities.
Additionally, weaknesses in PSSF’s member data system were flagged. Thousands of records were missing critical information such as contribution amounts, retirement dates, pension status, and contact details.
Some anomalies included:
- 194 members over the age of 60 still classified as active
- 16,700 members lacking gender data
- 13 members listed without sponsors
- One record missing a personal number
“In the circumstances, the existence of effective controls on member details and data could not be confirmed,” Gathungu warned.
The findings raise fresh concerns about the management of retirement savings for thousands of public workers, even as the PSSF continues to grow into one of the country’s largest pension funds.
