The Retirement Benefits Authority (RBA) has made new proposals to curb the non-remittance of pension deductions, including higher fines and funding freezes.
The proposals also seek to put the Kenya Revenue Authority (KRA) at the heart of the collection of the unremitted contributions.
Ministries and State departments risk missing out on funds disbursed by the National Treasury for non-remittance while the RBA has signalled higher penalties as an effective deterrent for the pension defaults.
The push for harsher penalties comes amid a rise in collected but unremitted deductions, which reached a high of Sh72 billion in June 2025.
“The RBA proposes to reinstate the statutory clearance mechanism whereby sponsors may only access disbursements or statutory funds upon proof of full compliance with remittance obligations to pension schemes,” the RBA says in a policy document.
“Empower the authority to enforce direct recovery of unremitted contributions from defaulting sponsors, including by way of garnishee orders,” it adds.
The Retirement Benefits Authority reports that the County Pension Fund has yet to remit Sh4.3 billion.
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The policy changes also seek to anchor the collection of the unremitted contributions as part of the functions of the taxman under the KRA Act. Changes to the Act are expected to allow the taxman to issue agency notices to the holders of unremitted pension deductions and attach the bank accounts of defaulting employers.
RBA seeks to impose personal liability on accounting officers of sponsors for failure to remit, while enhancing penalties and interest provisions.
The management of RBA signalled the tighter screws in September last year, as it attributed the surge in unremitted pension contributions to “indiscipline” in the public sector where funds allocated for salaries and wages are reallocated for other purposes.
Unremitted pension contributions grew by 26.31 per cent to Sh72 billion in 12 months to June 2025 from Sh57 billion in June the previous year as per RBA data.
The bulk of the unremitted funds or 98 per cent of the withheld contributions, are linked to county governments and quasi-government institutions, including cash-strapped public universities and sugar millers.
Data from the Retirement Benefits Authority shows that there is more than Sh50 billion in unremitted pension contributions.
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“Yes, the figure has grown, and we agree, it is not that we are not enforcing mechanisms of remittance of the contributions. Why does this happen? It is purely indiscipline because if you look at it from a government point of view, all government agencies have budgets that they prepare on an annual basis,” RBA Chief Executive Officer Charles Machira said in a previous interview. “Those budgets are remitted to the National Treasury for approval or through their line ministry.”
The penalty for late remittance of pension deductions is currently at the rate of Sh20,000 or 5 per cent of the outstanding amount every month, whichever is higher.
