NAIROBI, Kenya- Kenya’s Retirement Benefits Authority (RBA) is stepping up efforts to tighten the legal and regulatory frameworks governing pension remittances.
This push comes in response to a worrying trend: unremitted pension savings have ballooned to Ksh 50 billion by the close of the 2023/24 financial year, with public universities and state corporations being the biggest culprits.
The RBA is sounding the alarm, highlighting the dire need to address pension remittance failures, particularly within the public sector.
Charles Machira, RBA’s Chief Executive Officer, pointed out that public institutions are the primary offenders, holding over 95pc of the unremitted funds.
Among the worst offenders are public universities, which owe a staggering Ksh 26 billion in pension contributions. The situation is exacerbated by reduced funding and the collapse of parallel programs that once bolstered university coffers.
“We need to strengthen the regulatory framework to ensure that those who are not remitting contributions on time, particularly in the public sector, face remedial action,” Machira emphasized.
The RBA is looking to harmonize several key laws, including the Retirement Benefits Act and the National Social Security Fund Act, to close loopholes and enforce timely remittances.
The financial strain on public universities is a significant factor behind the growing pension debt.
For instance, Moi University’s Council Chairman, Dr. Humphrey Njunguna, highlighted the financial hit the university took when its parallel programs, which once generated Ksh 4 billion annually, were scrapped.
Despite this loss, operational costs and wage bills remained unchanged, pushing the university deeper into debt.
Similar challenges are faced by county governments, which inherited pension liabilities from former local authorities. These unremitted contributions are not just a financial burden but also a ticking time bomb for retirees depending on these funds.
In a bid to address these challenges, the RBA has launched its Strategic Plan 2025-2029 and the National Retirement Benefits Policy.
These initiatives aim to ensure that pensions are deducted as soon as the exchequer releases funds for salaries.
Machira revealed that the RBA is in active discussions with the National Treasury to integrate pension deductions directly into the payroll system to eliminate delays and reduce the scope for misuse.
At the launch of these strategic documents, the National Treasury also urged the pension sector to diversify its investment portfolio beyond traditional asset classes like government securities.
With aspirations to grow pension Assets Under Management from Ksh 1.9 trillion to Ksh 3.2 trillion within five years, the RBA is looking to expand pension coverage from the current 26pc to 34pc by 2029.
The RBA’s push for stronger legal frameworks and innovative strategies represents a critical step towards securing the financial future of Kenyan retirees.
By addressing the root causes of unremitted pension funds and exploring new investment avenues, the RBA is working to ensure that all Kenyans can look forward to a stable retirement.
