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Governors now seek bailout over Sh100bn unremitted pensions
Council of Governors Chair Ahmed Abdullahi addresses journalists in Nairobi on December 5, 2024.
Governors now want the national government to bail them out by settling the Sh100 billion they owe in unremitted pension funds for their employees, citing budget strains.
According to the governors, they inherited huge debts from the defunct councils, and the current debt owed to pension funds cannot be settled by their already squeezed revenue purse.
The Council of Governors Chairman, Mr Ahmed Abdullahi, said he will have conversations with Deputy President Kithure Kindiki and Treasury Cabinet Secretary John Mbadi on how to deal with the historical pension debt.
He admitted that the county governments don’t have the financial capacity to settle the debts, while also blaming it on the previous government and agencies which were never accountable to ensure the monies were remitted.
“Clearly, this is not what counties can pay under their current equitable share. Mistakes were made and we just have to have bailouts from the government to deal with this situation,” said Mr Abdullahi.
The CoG Chairman was responding to National Treasury Cabinet Secretary Mr John Mbadi, who accused governors and State departments of failing to remit retirement funds for some of their workers.
Mr Mbadi, who spoke at the closure of the 2025 Devolution Conference in Homa Bay on Friday, however, said data on unremitted pension contributions submitted by the Local Authorities Trust Fund, Local Authorities Provident Fund, National Social Security Fund, Public Service Superannuation Fund, and County Pension Fund revealed that a substantial amount of pension debt is due from the county governments.
National Treasury Cabinet Secretary John Mbadi.
“Pension debt by county governments has accumulated over the years from Sh23.3 billion relating to the defunct local authorities (pre-devolution), inclusive of accrued deficits, to now over Sh103.2 billion as of October 31, 2024, post-devolution,” said Mr Mbadi.
Mr Mbadi said holding workers' salaries meant to help them after leaving work and failing to channel it to the right account lays a foundation for bad retirement.
“It is not fair. It is unjust, because this money belongs to people who will one day retire, and as they go home, they want to have something in their pockets. You are killing the future of some individuals,” the Treasury CS said.
This, he said, makes affected government employees unable to enjoy retirement because they do not have money when they leave public service upon reaching 60 years.
Mr Mbadi said a number of county governments and some State agencies deduct salaries with the intention of sending the money to retirement schemes.
However, rogue governors later decide to use the funds for other projects and fail to give it back to the employees whose salaries were slashed.
The Treasury CS described this as a criminal act.
“If you are supposed to pay salary to a staff member and part of that salary is supposed to go to his or her pension, there is no rationale in paying half of the salary and leaving the rest of the salary with you or with the county government to implement other things or to pay other things,” he said.
Non-remittance of pension funds has been a concern for county government employees.
During the Local Authorities Provident Fund (LAPFUND)’s 14th Annual General Meeting, the Secretary-General of the County Government Workers Union, Mr Roba Duba, said the debt has accrued over 21 years, making it almost impossible for the pension schemes to invest.
The workers’ representative also accused governors of frequently shifting staff into different pension schemes once they take over office.
But Mr Mbadi asked governors to do their part and remit the monies.
“Whatever it takes, we must start the culture of remitting deductions to where they should be. I am calling upon the county governments and other relevant institutions to verify and clear the debts to safeguard the social securities of our pensioners,” said Mr Mbadi.
