Unremitted pension, Sacco deductions and staff benefits by State agencies rose by Sh14.33 billion to Sh51.965 billion in the nine months to March this year, with the defaults jeopardising the retirement days of their staff.
Controller of Budget disclosures revealed a fresh bill of Sh9.21 billion worth of unremitted Sacco deductions while arrears for personnel benefits such as salaries rose by Sh4.67 billion to Sh40.2 billion in the review period. Unremitted pension arrears increased by Sh440.19 million to Sh2.54 billion in the same period.
Total arrears for unremitted pension, Sacco deductions and staff benefits by the State agencies stood at Sh37.634 billion in June 2025.
Photo credit: Pool
Total arrears for unremitted pension, Sacco deductions and staff benefits by the State agencies stood at Sh37.634 billion in June 2025, and the increase in the bill shines the spotlight on the agencies’ resolve to remit the deductions that are critical in the retirement of the workers.
Failure by ministries, departments and agencies to remit these deductions and benefits has depleted the monthly earnings of the workers, besides putting at risk their retirement payouts.
Funding woes of most of the MDAs have been partly blamed for the growth in unremitted deductions and unpaid benefits. Institutional "indiscipline", where money deducted from the staff payslips or benefits due to them is instead used to fund operational costs, is also to blame.
Controller of Budget Margaret Nyakang’o at a past function.
Photo credit: File | Nation Media Group
Dr Margaret Nyakang’o warned that failure to remit the deductions and pay the benefits risks the welfare of employees in what could hurt productivity and service delivery at government offices.
“Accounting Officers should ensure the timely payment of statutory deductions, as failure to do so is likely to affect staff welfare and morale,” Dr Nyakang’o warned. “Notably, pending bills for statutory deductions, which are mandatory obligations for Semi-Autonomous Government Agencies, do not conform to best accounting practices.”
Workers continue to lose out on compounded investment income from their monthly pension contributions whenever the employers fail to remit these deductions.
The employees also stare at uncertain futures given that unremitted statutory deductions hurt the ability of the Exchequer to make timely payments of monthly pension dues to retired workers.
The mounting stock of unremitted statutory deductions has since prompted a proposal to the law in a bid to enforce compliance and protect retirees.
The firms that fail to remit the statutory deductions could soon face stiff penalties if the proposed Kenya Revenue Authority (Amendment) Bill, 2026 sails through Parliament.
The Bill seeks to allow KRA to collect unremitted pension from employers in a bid to reduce the mounting stock of such deductions.
Under the proposed legal change, KRA will be allowed to freeze bank accounts, seize assets or deactivate the tax PINS (Personal Identification Numbers) of the firms that fail to remit statutory deductions.
The Tax Procedures Act empowers KRA to deactivate PINs and issue agency notices to collect cash due from taxpayers’ bank accounts whenever there are defaults.
These are the powers that look set to be used on firms that fail to remit statutory deductions if the Bill is passed into law.
