Fund seeks Treasury's help to recover Sh36.28 billion debt owed by counties

County Pension Fund (CPF) chief executive officer Hosea Kili at a past function. The fund is seeking to recover more than Sh36 million owed to it by county governments. [File, Standard]

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

The fund’s 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 debt at the source, before the money can reach counties.

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

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 they owe would be settled but have not signed the agreements on payment,” 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.

Senate County Public Investments and Special Funds Committee chairman Godfrey Osotsi. [File, Standard]

Kili said due to cash flow constraints and high wage bills, the pension liability debt owed by the county governments has accumulated over the years to the current level, and they want a legal mechanism introduced that will allow statutory creditors access to the deductions from the source.

He said CPF is seeking to have a special bond issued by the National Treasury on behalf of the counties and deduct the same from the counties’ share of revenue so as to ensure the billions of shillings owed to the fund are cleared once and for all.

“County Pension Fund 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, under the programme, have been hindered after county governments stopped the transition authority from transferring the property,” he said.

Kili said CPF is engaging various devolution stakeholders, including the Controller of Budget, the National Treasury, workers’ unions and the Retirement Benefits Authority to push the counties to clear the debt.

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.

Kisumu Senator Tom Ojienda questioned why CPF has not taken legal action against the counties over the debt.

“Why is the County Pension Fund not taking legal action to compel county governments to pay the billions of shillings to ensure retirees are able to get their pension when it is needed? Urgent action needs to be taken to address this matter,” said Ojienda.

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