Kenya to fully digitise pension payments by July 2025 to combat fraud

The government will fully digitise the pension payment system from July 1, 2025, to end widespread delays and fraud targeting retirees, Treasury Cabinet Secretary John Mbadi has announced.

Mbadi told the Senate on Wednesday that the current manual system has not only delayed pension disbursements but has also exposed retirees to sophisticated fraud schemes.

He said the transition to an end-to-end Enterprise Resource Planning (ERP) solution will ensure automation of claims submission, approvals, integration with key government systems, and allow retirees to access services remotely.

“We are trying to ensure the management of pensions is automated by putting in place a self-service portal, where the pensioners don't have to move anywhere. Even at the comfort of their homes, they can access almost all the services they need; file documents and start withdrawing money to their phones from their banks,” Mbadi said.

He revealed the Treasury has already onboarded a contractor to develop the digital system that will allow automatic migration of retirees from the payroll to the pension payroll.

The system will also integrate biometric verification with the National Savings Registry to detect and stop payments to deceased pensioners.

“We are alive to the fact that some pensioners who are no longer alive continue to receive payments. Through biometric pension verification and the e-pension system, we are working to stop this,” he said.

The Senate heard shocking revelations of pension fraud from Migori Senator Eddy Oketch, who said a criminal network has been accessing retirees' banking details and stealing pension money soon after deposits are made.

“I am seeking a statement from the Senate Finance and Budget Committee regarding a number of fraud cases involving Absa Bank accounts since 2022, as well as the status of investigations into those cases,” Oketch said.

He cited a recent case in which a retired teacher lost her full pension payout of Sh2.4 million. Mbadi admitted that rogue pension and bank officials have been involved in collusion to defraud retirees. “We have identified cases where pensioners have been defrauded due to collusion between pension staff and banking officials,” he said.

To counter this, the government is working with commercial banks to track dormant pension accounts, flag suspicious activities and stop unauthorised withdrawals.

Mbadi blamed the long delays in pension payments on late submission of retirement claims, incomplete files, miscoordination between ministries, and liquidity problems. “I agree there have been challenges. When pensioners leave employment, they often wait too long to receive their benefits, partly due to systemic inefficiencies. However, there are additional issues contributing to the delays,” he said.

He said 18 pension officers have been deployed to institutions like the Teachers Service Commission to fast-track verification and submission of claims. The government is also enforcing rules requiring employers to notify workers of retirement one year in advance and to submit pension claims nine months before retirement.

Mbadi denied that pension funds had been diverted for other government spending. “I am not aware of any instance where pension allocations have been re-allocated. In fact, pension funds are among the most securely ring-fenced allocations,” he said.

He assured Senators that the pension is prioritised in budgeting and remains a first charge obligation. As of May 21, Treasury had paid Sh17.4 billion of processed claims, with Sh16.9 billion still pending. “I think we are going to do much better than last year, although we should do 100 per cent,” Mbadi said.

Other Topics To Read

• National
• pension uptake kenya
• NSSF pension plan
• pension contributions
• pension arrears
• digital pension system
• Kenya to fully digitise pension payments by July 2025 to combat fraud
• Headlines