The Parliamentary Budget Office (PBO) wants the government to punish counties that deduct pensions from workers and fail to remit the funds, as unremitted cash hit Sh91.2 billion in October 2024.
The unremitted pension deductions continue to rise despite the Treasury’s decision to form a task force to address the issue last year.
In its latest report on the 2025 Budget Policy Statement (BPS), the PBO warns that the trend counties have taken risks subjecting thousands of county workers to retirement without a pension, which would leave them relying on the State’s insufficient social security net.
“Besides the recommendation in the BPS of having the county enhance record keeping of the arrears and prioritisation of their payment, the government can employ some form of sanctions over counties that continue to delay these remittances,” the PBO says.
The PBO report, however, has not proposed any sanctions the government can implement, leaving it up to senators to consider actions to be taken on counties that continue to accrue the bills.
“The outstanding non-remitted fund totalled Sh91.2 billion as of October 2024, owed to Local Authorities Provident Fund-DC—Sh45.7 billion, Local Authorities Pension Trust-DB—Sh39.5 billion and County Pension Fund -DC—Sh5.9 billion,” said the PBO.
Counties have been lagging in remitting pension deductions to the schemes for several years now, and the debts by last October were a Sh17.8 billion increase from a debt of Sh73.4 billion by August 2023.
The PBO terms the 24.5 percent increase in pension debts in just 14 months as alarming, warning that it risks leading to “staff retiring without pensions.”
“The risk would be having retirees leaning on social security from the government to stay afloat, which calls for the diversion of resources from the economy’s productive sector,” it says.
The Treasury in the 2024 Budget Review and Outlook Paper indicated it was setting up a team to verify counties’ unremitted pension deductions, after the Senate sought to establish actual unremitted counties’ pension deductions.
The taskforce was to also propose a roadmap for settling the unremitted pensions, Treasury said.
While the taskforce was to complete the verification process within 90 days, there has not been any report on the issue more than five months later and the PBO now believes the solution lies in the government sanctioning counties that continue with the habit.
The unremitted pensions of Sh91.2 billion account for about half of counties’ pending bills that reached Sh182 billion by end of December 2024, according to the latest report by the controller of budget.
