Pensioners miss out on Sh34 billion payments due to Treasury delays, system downtime
As of September 30, 2024, pension payments for ordinary and commuted pensions had reached Sh58.57 billion, but only Sh24.23 billion was covered by exchequer releases.
Pensioners missed out on Sh34 billion in pension payments over a three-month period due to delays by the National Treasury and system downtime, the Controller of Budget Margaret Nyakang’o has revealed.
The gap in payments occurred during the three months leading up to September 2024.
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The CoB says the government only managed to pay Sh32 billion in pensions and gratuities, which accounts for just 14 per cent of the annual pension budget of Sh223 billion.
In the July-September national government quarterly report, Nyakang’o said that “the pension information system downtime and delays in funding pensions impeded budget execution.”
As of September 30, 2024, pension payments for ordinary and commuted pensions had reached Sh58.57 billion, but only Sh24.23 billion was covered by exchequer releases, leaving an unfunded gap of Sh34.34 billion.
“The government had arrears in its contributions to the Public Service Superannuation Scheme (PSSS), with cash flow problems deepening as tax collections remained below target,” Nyakang’o said.
She noted that by the end of September, the Treasury had failed to remit Sh2.72 billion in pension contributions due to PSSS for that month.
Revised estimates
The CoB report also noted that pension payments in the first three months of the 2024/2025 fiscal year amounted to 14 per cent of revised estimates, down from 16 per cent in the same period in the previous year.
This delay in pension payments is part of a broader cash flow crisis that began in the previous fiscal year, with Sh24 billion in pensions remaining unpaid to over 259,000 retirees and 83,000 dependents. Treasury attributed this delay to liquidity challenges.
In response to the persistent pension payment issues, Members of Parliament amended the Pensions Act in August 2023, introducing stricter timelines for pension disbursements.
The new law requires public entities to submit retirement documents within 30 days of an employee’s retirement, while the Pensions Department has 60 days to process payments.
Despite a Sh35 billion increase in the pension budget for the current fiscal year, the disbursement of funds continues to face obstacles due to ongoing liquidity issues.
“The allocation for pensions and gratuities for FY 2024/2025 amounted to Sh199.37 billion, revised to Sh223.15 billion in Supplementary Estimates I, compared to Sh187.50 billion allocated in FY 2023/2024,” reads the CoB report.
