NAIROBI, Kenya – Government agencies and State corporations have failed to remit Sh6.09 billion in statutory deductions for the year ending June 30, raising fresh concerns over accountability in public institutions.
An analysis of Treasury data shows the backlog stems largely from unpaid pension, tax and social security contributions, despite the amounts already being deducted from employees’ salaries.
Rising Pension and PAYE Arrears
Unremitted pay-as-you-earn (PAYE) tax rose sharply by Sh4.3 billion to hit Sh23.39 billion.
Pension contributions withheld from employees but not forwarded increased to Sh34.7 billion, up from Sh33.02 billion a year earlier.
Treasury data also shows arrears to the National Social Security Fund (NSSF) climbed to Sh641.58 million, while unremitted contributions to the Social Health Insurance Fund (SHIF) surged to Sh125.62 million, up from Sh76.45 million.
Workers at Risk
The delays mean thousands of workers could be denied essential healthcare services under SHIF, while retirees face uncertainty over their pension and NSSF benefits.
“This culture must stop. We must now start the culture of remitting all deductions to where they should be remitted,” Treasury Cabinet Secretary John Mbadi said, urging both national and county agencies to clear the debt and protect the welfare of employees.
Mounting Penalties
Noncompliance is also inflating the debts owed by the institutions. By law, employers who fail to remit PAYE and NSSF contributions by the ninth day of the following month incur a penalty of 5 percent of the outstanding amount plus 1 percent monthly interest.
Failure to remit SHIF contributions attracts a 2 percent penalty, further compounding the arrears.
Accountability Questions
The persistent delays have disrupted pension payments in the past and raised suspicions of poor financial management or possible diversion of funds within public institutions.
Treasury officials warned that if the trend continues, it will deepen financial exposure for both employees and the State, while undermining Kenya’s social safety net for workers.
