Members of Parliament have given Auditor-General Nancy Gathungu six months to probe millions of shillings that Kenya is still paying British pensioners who left the country six decades ago.
The National Treasury spent Sh150 million to pay these pensioners in the 2022/2023 financial year and has budgeted a further Sh42 million to pay the retirees in the 2023/2024 financial year.
The annual pension bill for the retirees, born between 1930 and 1940, has remained at Sh150 million and auditors now question whether Treasury could be paying ghost beneficiaries given that there is no full disclosure as to the identity of the beneficiaries.
The payments are enshrined in law through the Widows and Orphans Act, the Asian Widows and Orphans Act and the Asian Officers Family Pensions Act which provide for contributory schemes for the Europeans and Asians through Crown Agents.
But the National Assembly’s Public Debt and Privatization Committee now wants Ms Gathungu to conduct a special audit on the millions of shillings that Kenya has been paying these colonial pensioners annually since 1963.
The call for the special probe follows questions raised by Ms Gathungu and Controller of Budget Dr Margaret Nyakang’o over the authenticity of the payments.
“By December 31, 2023, the office of the Auditor-General should undertake a special audit on pensions relating to pensioners paid through the Crown Agents Bank in the UK and submit a report to the National Assembly within the stipulated timeframe,” said Dr Makali Mulu, who is the vice-chairperson of the committee, in the report tabled in the National Assembly.
A performance audit report released in April 2019 on the administration of public service pensions scheme noted that pension paid to Asian and European pensioners is paid through the Crown Agents Bank, a UK-based organization.
The foreigners retired when Kenya attained independence in 1963 leading to Africans taking most of the roles in public service.
However, no returns were submitted to authenticate the existence of the pensioners raising questions over how many of the pensioners are still alive, if any, and whether they actually receive the pension.
The audit also identified lack of procedures to identify deceased pensioners and dependents, and that the pensions department at the National treasury continued to pay into the accounts of deceased pensioners and dependents for a period ranging from one month to seven years.
Following the audit, the Auditor-General recommended the Treasury to enforce follow up by the pensions department on filing of life certificates to identify deceased pensioners and dependants so as to ensure that payment is only made to legitimate persons.
“Further, the National Treasury should reengineer the Pension Management Information System to ensure integrity. The system should also interface with the government’s Integrated Personnel Payroll Database (IPPD) to ensure tracking of government employees on the payroll,” said Ms Gathungu.
The Kenya Anti-Corruption Commission (KACC), the predecessor of the Ethics and Anti-Corruption Commission (EACC), in 2008 released a report after a thorough probe of Kenya’s pensions system.
The report raised the same questions that MPs are now asking, revealing that the pensioners are paid in the Sterling Pound which means they earn more than other pensioners owing to the strength of the pound against the Kenyan shilling.
“The pensions department continues to pay these Europeans and Asians using the British currency which translates to higher figures than those paid to other pensioners,” said KACC’s report.
“It is also difficult for the pensions department to authenticate the actual dependants of the Britons and Asians living in the UK as most of the principal pensioners may have died,” it said.
This comes at a time the huge volume of public servants retiring each year has continued to pile pressure on the State’s coffers as pensions continue to pile, which has raised the public wage bill.
Pensions expenditure will amount to Sh189.09 billion in the 2023/24 financial year, an increase of Sh16.45 billion from the 2022/23 amount of Sh172.64 billion.
“This is mainly attributed to an increase in ordinary pension payments to Sh91.23 billion from Sh82.93 billion occasioned by an increase in the number of retiring public officers (12,290) particularly retiring civil servants and military personnel,” said the Committee.
Furthermore, the 2023/24 financial year will also see pensioners receive the next biennial pension increase at the rate of 3 per cent as from July 1, 2023.
Kenya has over 1,075 registered pension schemes. The National Social Security Fund (NSSF) is the mandatory scheme for all employers while the Public Service Superannuation Scheme (PSSS) is for civil servants.
