Pension non-remittance hits Sh40b, RBA reveals

Hand putting Coins in glass jar with retro alarm clock for time to money saving for retirement concept. [Getty Images]

Public institutions have not remitted over Sh40 billion in pension contributions from their employees.

The Retirement Benefits Authority (RBA) Deputy Director for Supervision Caroline Wanjala said the most affected institutions were public universities, parastatals and county governments.

She warned that the situation poses an economic threat to thousands of employees retiring from the public service since they cannot access their retirement benefits.

Speaking during the Zamara Trustee Convention in Mombasa, Ms Wanjala said RBA was proposing an amendment of the law to allow Kenya Revenue Authority (KRA) to help follow up on the remittance.

“Non-contributions are mostly by universities and parastatals. ="https://www.standardmedia.co.ke/business/business/article/2001461438/retirement-authority-to-go-after-firms-that-do-not-remit-deductions-from-staff">We are seeking to have< the pension be deducted at source before it is transmitted to accounts. We want KRA to be incorporated to help follow up on the accrued amounts standing at over Sh40 billion plus interest,” said Wanjala.

Hard times

She said there have been ups and downs, especially during economic hard times. Wanjala said, so far, there are 1,076 retirement schemes with a membership of 7.1 million worth Sh1.7 trillion in pension assets.

“We are still heavily invested in government bonds and property,” said Wanjala, adding that since the establishment of the umbrella fund in 2005 by Zamara, has flourished to 34 umbrellas worth over Sh100 billion.

University of Nairobi UON Pension ="https://www.standardmedia.co.ke/business/news/article/2001258530/counties-on-the-spot-over-sh30bilion-pension-cash">Chairman George Gitau< said they are owed Sh6.5 billion in pension remission to members, which has caused a lot of challenges to members seeking funds.

Prof Gitau said the funds have not been remitted over the years for close to 10 years, not accessible to scheme members and cannot grow. He said RBA is seeking a multi-sectoral approach on unremitted funds. However, he said the members are safe and can access the funds through their multi-billion asset investments.

“We have Sh15 to 16 billion worth of assets that can sustain in paying the members,” he said.

Zamara Executive Director James Olubayi said the pension sector had witnessed a noticeable growth to the level of Sh1.7 trillion with a contributor population of 4.3 million, representing coverage of 26 per cent of the working population.

“The retirement benefits sector is at a pivotal juncture, and it must adapt to the evolving needs and attitudes of its membership base. Trustees have a critical role to play in steering the course toward a secure and prosperous retirement for all members, regardless of age,” said Olubanyi.