A showdown is looming between governors and senators after a Senate watchdog committee warned counties against delaying the remittance of pension funds.
The Senate County Public Investments and Special Funds Committee (CPISFC) accused the devolved units of failing to remit the funds on time, leaving many retirees to suffer.
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The committee has warned the county bosses and other county entities responsible for submitting the funds of dire consequences should the matter not be resolved in time.
Committee chairman Godfrey Osotsi says that the delays have negatively affected the lives of retired public servants, adding that plans are underway to create a taskforce to address the matter.
The taskforce, according to the Vihiga senator, will consist of all stakeholders responsible for collecting, managing and disbursing the fund, and is expected to submit its report to the Senate within a month.
The process will be spearheaded by the National Treasury and the Office of the Controller of Budget (OCOB), with the CS Njuguna Ndung’u tasked with the responsibility of engaging all relevant parties to resolve the matter.
“It is crucial that we hold these county entities accountable for their obligations to retirees. Transparency, accountability, and effective management of funds are essential to ensure that pensions are remitted promptly and in full,” said Osotsi, who is also the Vihiga senator.
Osotsi said that top of the agenda for the taskforce will be to address the variance between the reported outstanding pension balances from county governments by the different stakeholders – a major concern that the committee says has been affecting the management of the fund.
Senate County Public Investments and Special Funds Committee chair Godfrey Osotsi.
Besides the National Treasury, other state agencies that are expected to form part of the team will also include the Local Authorities Trust Fund (LAPTrust), Local Authorities Provident Fund (LAPFund), and the Council of Governors (CoG).
One of the responsibilities of the team will be to reconcile the outstanding balances and discuss the penalties and interests to be surcharged on entities responsible for the delays and non-remittances.
Regulation 10(4) of the Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations, 2000 provides that all the pension contributions deducted from members by the employer must be remitted to the pension scheme in full before the 10th day of every calendar month.
The third mandate of the task force will be to explore a strategy of recovery and develop a repayment plan.
Although in 2021 the National Assembly amended the law to give the Kenya Revenue Authority (KRA) the power to attach bank accounts of employers who fail to remit pension funds, little seems to have changed, forcing the Senate to intervene.
Available data shows that all county entities have in the range of Sh80 billion that has not been paid to pension schemes as at March 2023. It stood at Sh45 billion, five years ago.
An analysis by the CoB of the data on outstanding pension contributions, indicates that submissions from pensions schemes do not agree with what counties have presented.
Total figures from the schemes amount to Sh85.05 billion which comprises Sh48.79 billion owed to Lap Fund, Sh32.35 billion owed to Lap Trust and Sh3.91 billion owed to CPF.
The figures show that accrued interest arising from the outstanding principal amounts are higher than the original principal balances and the committee has proposed that there is need for a waiver on the accumulated interests.
Nairobi County has the highest balance of Sh42.76 billion, which accounts for 57.8 per cent of the total outstanding amount, followed by Mombasa at Sh10.6 billion (14.4 per cent).
Seven counties reported no great amounts due to the pension scheme. They are Tana River, Marsabit, Kiambu, Busia, Lamu, Baringo and Kwale counties.