The Controller of Budget Margaret Nyakang'o.
The National Treasury’s delays in releasing funds, coupled with a downtime of the system used to manage pensions saw pensioners miss out on Sh34 billion payments in just three months, underlining the impact of the twin problems on retirees.
During the three months ending September 2024, the government paid Sh32 billion pensions and gratuities, which was 14 percent of the annual pensions budget of Sh223 billion, notes the Controller of Budget (CoB).
“Notably, the pension information system downtime and delays in funding pensions impeded budget execution," CoB Margaret Nyakang’o noted in the July- September national government quarterly report.
"As of 30th September 2024, the ordinary and commuted pension processed for payment totalled Sh58.57 billion, of which exchequer releases amounted to Sh24.23 billion, equivalent to the unfunded difference of Sh34.34 billion.”
Ms Nyakang’o also noted that the government had arrears in its contributions to the Public Service Superannuation Scheme (PSSS), underlining cash problems that Treasury has faced as tax collections remained below target.
By the end of September, the government failed to remit Sh2.72 billion to PSSS in September remittance.
“Total payments towards Pensions and Gratuities in the first three months of FY 2024/2025 represented 14 percent of the revised estimates, compared to Sh30.83 billion (16 percent) recorded in FY 2023/2024,” the CoB stated.
The pension payments challenges are an extension of a cash problem that started during the previous fiscal year, forcing retirees to go for months without payment of billions of shillings.
In the year ending June 2024, the Treasury failed to pay Sh24 billion pension that was due to some 259,222 retirees and 83,615 dependents, blaming it on liquidity challenges.
MPs in August last year amended the Pensions Act to establish a clear timeline for pension disbursement, requiring public entities to submit necessary documents to the Pensions Department within 30 days of an employee's retirement and the Pensions Department will have a 60-day window to process pension payments.
The government increased the budgetary allocation to pensions by Sh35 billion during the current fiscal year, but disbursement of the funds still continues to be hampered by liquidity challenges.
“The allocation for Pensions and Gratuities for FY 2024/2025 amounted to Sh199.37 billion, revised to Sh223.15 billion in Supplementary Estimates I, compared to Sh187.50 billion allocated in FY 2023/2024 ,” the COB noted.
