University staff face uncertain future as Sh25.9bn in pension contributions remain unpaid
This financial crisis is causing deep concern among employees, many of whom face the prospect of retiring without the pension benefits they have worked hard for over the years.
University lecturers and staff across Kenya are increasingly concerned about their finances as a massive Sh25.9 billion in pension contributions remains unpaid by university employers.
These deductions, taken from staff salaries over the years, are yet to be remitted, putting the retirement security of thousands of employees at risk.
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The alarming situation was brought to light during a two-day conference in Naivasha, Nakuru County, where university leaders, policymakers, and representatives from the private sector met to discuss alternative funding strategies for the country's universities.
The most pressing issue discussed was the unremitted pension funds, which now make up the largest outstanding debt for universities, surpassing both PAYE (Pay As You Earn) arrears and unpaid bills to suppliers and contractors.
According to records from the Universities Fund, the total debt owed by universities stands at Sh72.2 billion as of 2025.
Within that, pension contributions alone account for Sh25.9 billion, while an additional Sh20 billion remains unpaid in PAYE taxes.
Other debts include Sh3.3 billion in Sacco contributions, Sh3.1 billion owed to suppliers, and Sh5.1 billion linked to halted capital projects.
This financial crisis is causing deep concern among employees, many of whom face the prospect of retiring without the pension benefits they have worked hard for over the years.
Geoffrey Monari, CEO of the Universities Fund, highlighted the severe consequences of the crisis.
"Imagine working for thirty or forty years only to leave empty-handed because your pension was never remitted. It is a sad and dire situation. The pension crisis is now a huge challenge for employees who may retire without their benefits," he said.
Despite a slight reduction in overall debts from Sh75 billion to Sh72.2 billion in the past two years, experts worry the situation could worsen after a recent court ruling suspended the implementation of a new university funding model.
This new model had helped reduce university debts by Sh3 billion, but the High Court ruled it unconstitutional on December 20, 2024, halting its rollout. As a result, universities are left facing the possibility of mounting debts again.
The financial challenges faced by public universities have been building over several years, primarily due to insufficient funding from the government.
In just one year, the debts increased by more than Sh8 billion, and the situation has become even more dire for some institutions.
For example, Egerton University's debt burden had surged to Sh9 billion by 2023, up from Sh6 billion in 2019.
The university struggled to stay afloat during the COVID-19 pandemic, even reducing staff salaries by 40 percent from 2020 to 2023.
While full salaries have since been reinstated, the financial instability continues to pose challenges for the institution.
Other universities, including Moi University, Kenyatta University, and the University of Nairobi, have also been grappling with similar financial troubles.
The increasing debts are making it difficult for universities to meet basic obligations, including paying taxes and remitting pension contributions to their staff.
In some cases, universities have even had to shut down campuses or default on payments to contractors due to these ongoing financial struggles.
The issue of university funding is further exacerbated by government allocations that fall short of the universities' actual needs.
In the Financial Year 2022-2023, universities requested Sh180 billion to meet their budget requirements, but the government only allocated Sh80 billion.
For the 2023-2024 year, the allocation increased to Sh82 billion, but this remains far below the necessary amount to stabilise the sector.
During the Naivasha conference, stakeholders emphasised the urgent need for comprehensive reforms to address the financial crisis in universities.
They warned that without a sustainable funding model, universities will continue to struggle, which could impact the quality of education and the well-being of staff.
University leaders and staff members have called for immediate action to ensure that pension contributions and other statutory obligations are fulfilled.
Failure to do so, they argue, could leave future retirees without the support they need after decades of service.
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