Pensions fund eyes Sh36b for counties from the Treasury

State wants to control funds run by the Local Authorities Pension Trust and County Pensions Fund. [Courtesy]

The County Pension Fund (CPF) wants the National Treasury and the Controller of Budget to directly pay it the Sh36.28 billion debt owed by county governments.

CPF Chief Executive Officer Hosea Kili does not want the Treasury to give counties their allocations after which the devolved units will use a portion of it to pay the debt as has been the case.

Kili, who spoke when he appeared before the Senate County Public Investments and Special Funds Committee in Nairobi on Tuesday, said they want to collect the debt at the source.

He said paying the money directly to the fund, every month when counties receive their allocations from the National Treasury, will arrest cases of non-payment in future that could deny retirees their pension.

The committee is carrying out an inquiry following a report released by the National Treasury last year that showed the counties owed pension firms in excess of Sh60 billion.

Mr Kili said Nairobi County owes them the biggest amount, at Sh25.48 billion. Mombasa owes CPF Sh4.37 billion. Other counties that have not cleared their debts to CPF include Nakuru (Sh239.89 million), Trans Nzoia (Sh463.13 million), Kiambu (Sh194.16 million) and Busia (Sh218.56 million).

"Nyeri, Tana River and Nyamira counties have cleared their debts while Kwale and Kakamega have signed debt repayment plans.

"Kisumu, Kirinyaga, Bungoma and Makueni have agreed on how the debts," Kili told the committee chaired by Vihiga Senator Godfrey Osotsi.

The CEO told the committee that since the county governments get a share of the national revenue every month, they intend to appeal to the national government to issue a special bond on behalf of the counties to reduce the debt.

Kili said due to cash flow constraints and high wage bills, the pension liability debt owed by the counties has accumulated to the current levels.

He wants a legal mechanism introduced to allow statutory creditors access to the deductions from the source.

"CPF has tried several ways to recover the debt owed by counties. Through these efforts, we have been able to get Sh1.87 billion. Our efforts to get another Sh7.2 billion have been hindered after counties stopped the Transition Authority from transferring the property," he said.