Thousands of county employees face uncertainty over their retirement after counties failed to remit Sh100.24 billion in statutory deductions, salaries and staff claims, some outstanding for more than a decade.
The report by Controller of Budget Margaret Nyakang’o for the 2025/2026 financial year shows county executives accounted for Sh98.44 billion of the arrears, while county assemblies owed Sh1.80 billion.
The unremitted deductions include contributions to the Local Authorities Provident Fund (LAPFUND), Local Authorities Pensions Trust (LAPTRUST) and National Social Security Fund (NSSF), raising concern that workers could retire without benefits deducted from their pay.
“Unremitted statutory deductions and outstanding salary arrears stood at Sh100.24 billion by June 30, 2026,” the report says, warning that the crisis poses a major challenge to employees’ social security.
Nairobi accounted for the largest share, with Sh85.8 billion in unpaid statutory deductions, representing more than 93 per cent of the backlog reported by the 47 counties.
Machakos followed with Sh1.9 billion, Mombasa Sh1.3 billion and Murang’a Sh1 billion.
The report says some arrears have remained outstanding for more than 10 years, potentially delaying pension processing for workers nearing retirement and exposing counties to legal claims.
The findings add to longstanding concerns over county payroll management more than a decade after devolution.
Last year, Treasury Cabinet Secretary John Mbadi warned that persistent non-remittance by counties was threatening public pension schemes. He said withholding employees’ deductions was illegal and undermined returns to members.
Council of Governors chairman Ahmed Abdullahi has called for criminal prosecution of officials responsible for failing to remit pension deductions. He also urged counties to develop payment plans for arrears that cannot immediately be settled.
County Pension Fund chief executive officer Hosea Kili has proposed debt-asset swaps, Treasury bonds and payment at source. He has asked the National Treasury to issue a bond on behalf of the 47 counties to accelerate settlement.
The CoB also reported that counties had accumulated Sh172.53 billion in pending bills by June 30, 2026, including Sh126.40 billion in recurrent and Sh46.15 billion in development obligations.
Nairobi alone accounted for Sh86.9 billion, while Kilifi had Sh7.8 billion, Kiambu Sh5.6 billion and Machakos Sh4.28 billion.
Ms Nyakang’o said several counties had failed to honour payment plans. Under Regulation 55(2)(b) of the Public Finance Management (County Governments) Regulations, 2015, eligible pending bills should be prioritised as a first charge each financial year. Counties have accumulated more than Sh95.44 billion in new debts since 2022.
