State agencies accumulated Sh51.96 billion in unremitted pension deductions, sacco contributions and staff benefits by March this year, compared to Sh37.63 billion recorded in June 2025.
In a report, Controller of Budget (CoB) Margaret Nyakang’o said the increase in unpaid statutory deductions and staff benefits raises concerns over the welfare of employees and their retirement security.
The outstanding amount increased by Sh14.33 billion within the nine months, with unremitted sacco deductions accounting for Sh9.21 billion of the new arrears. Personnel benefits, including salaries, rose by Sh4.67 billion to Sh40.2 billion, while unpaid pension contributions increased by Sh440.19 million to Sh2.54 billion during the period under review.
Nyakang’o warned that failure by accounting officers to remit statutory deductions on time affects workers’ welfare and morale, while also going against proper accounting practices.
“Accounting officers should ensure the timely payment of statutory deductions, as failure to do so is likely to affect staff welfare and morale,” Nyakang’o warned.
“Notably, pending bills for statutory deductions, which are mandatory obligations for Semi-Autonomous Government Agencies, do not conform to best accounting practices.”
The CoB noted that the growing arrears were partly linked to funding challenges affecting many government institutions. She also pointed to cases where funds deducted from employees’ salaries or benefits owed to them are used to support operational costs instead of being remitted or paid.
Workers affected by delayed pension remittances continue to lose possible returns from their monthly contributions, while retirees may face delays in receiving their pension payments due to unpaid statutory deductions.
The rising arrears have led to efforts to strengthen enforcement and protect workers’ retirement savings through proposed changes in the law.
The Kenya Revenue Authority (Amendment) Bill, 2026, seeks to allow the Kenya Revenue Authority to recover unremitted pension deductions from employers who fail to submit the funds.
Under the proposed law, KRA would have powers to freeze bank accounts, seize assets or deactivate tax PINs of entities that fail to remit statutory deductions.
The Tax Procedures Act already allows KRA to deactivate PINs and issue agency notices to recover money from taxpayers’ bank accounts when there are defaults.
If the Bill is approved by Parliament, the same measures would apply to employers who fail to remit statutory deductions, strengthening action against entities with outstanding obligations.
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