State agencies owe Sh6 billion in unpaid statutory deductions, Treasury warns
Unremitted contributions to the Social Health Insurance Fund (SHIF) rose sharply to Sh125.62 million, compared with Sh76.45 million in the previous year.
Government agencies and State corporations have accumulated Sh6.09 billion in unremitted statutory deductions in the year ending June 30, raising concerns over financial management and accountability in public institutions.
Analysis of Treasury data shows that unpaid pay-as-you-earn (PAYE) tax grew by Sh4.3 billion to Sh23.39 billion, while pension deductions that were deducted but not forwarded to the relevant funds increased to Sh34.7 billion from Sh33.02 billion.
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Unremitted contributions to the Social Health Insurance Fund (SHIF) rose sharply to Sh125.62 million, compared with Sh76.45 million in the previous year.
The delays in remitting deductions put employees at risk of being denied essential healthcare services under SHIF and threaten retirees who rely on pension and National Social Security Fund (NSSF) payments for survival.
NSSF arrears climbed to Sh641.58 million from Sh640.94 million, highlighting how persistent delays in forwarding deductions endanger the financial security of workers in their later years.
Treasury Cabinet Secretary John Mbadi has called on national and county-level agencies to take urgent steps to clear the backlog.
“We must now start the culture of remitting all deductions to where they should be remitted. I am calling on the county governments and relevant institutions involved at the national level to verify and clear the debt to safeguard the social security of our pensioners,” he said.
The accumulation of unpaid statutory deductions also increases the financial burden on the government institutions themselves.
Employers who fail to remit PAYE and NSSF contributions by the ninth day of the following month incur a penalty of 5 percent of the outstanding amount, plus a 1 percent monthly interest for PAYE.
Failure to remit SHIF contributions carries a 2 per cent penalty, which further escalates the debt owed by public agencies.
Over the years, several parastatals and semi-autonomous government bodies have deducted statutory contributions from staff salaries but failed to transfer them to the designated funds, raising questions about fund management and possible diversion.
The practice has already disrupted timely pension payments, underscoring the wider consequences of noncompliance.
Treasury officials warn that if the current trend continues, it will deepen financial exposure for both employees and public institutions while straining the overall system designed to provide healthcare and retirement benefits.
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