CS Mbadi forms taskforce to address counties’ Sh80 billion pension arrears

Retired and retiring county staff can now look forward to a potential resolution to the pension crisis, as National Treasury Cabinet Secretary John Mbadi has appointed a new 18-member multi-agency taskforce to address the Sh80 billion in unpaid pension contributions by county governments.

The taskforce, officially named the "Taskforce on Non-Remittance of Pension Deductions to Pension Schemes by County Governments," is tasked with determining the exact pension arrears owed by counties and developing strategies to clear these liabilities.

This initiative is part of the government's commitment to ensuring timely remittance of pension contributions, which have been a long-standing issue in Kenya's devolved units.

"The object of the appointment of the taskforce is to actualise the government's commitment to the timely remittance of pension deductions to pension schemes by county government entities," Mbadi said in a recent gazette notice.

The taskforce will focus on finding a sustainable solution to clear the backlog of unpaid contributions and develop an appropriate framework for payment.

This development follows a Senate resolution aimed at addressing the pension arrears, after extensive investigations by the Senate County Public Investments and Special Funds Committee.

The committee, led by Vihiga Senator Godfrey Osotsi, probed the failure of both defunct local authorities and current county governments to remit pension deductions to the relevant schemes.

"County governments have a problem with remittance of pension deductions. The problem is two-fold; non-remittance by defunct local authorities and non-remittance by county governments," Senator Osotsi explained during the investigation.

In the gazette notice published last Friday, Mbadi appointed Albert Mwenda, the head of Budget, Fiscal and Economic Affairs at the Treasury, as the chairman of the taskforce.

The team is composed of key representatives from various government agencies, including the National Treasury, the Retirement Benefits Authority, the Office of the Controller of Budget, and the County Pension Fund, among others.

The taskforce's mandate is to assess the full scope of the arrears and devise a plan to clear them.

According to Mbadi, the team will develop a strategy that allows county governments to clear outstanding pension liabilities.

"The taskforce will develop an appropriate formula and framework for payment of pension liabilities that will enable the clearance of outstanding pension liabilities by county governments," he said.

The task force is also required to submit bi-weekly reports to the National Treasury and the Senate on its progress.

As of March 2023, the Senate's report revealed that counties were yet to remit more than Sh80 billion to pension schemes, including the Local Authorities Provident Fund (Lapfund), the Local Authorities Pension Trust (Laptrust), and the County Pension Fund (CPF).

An analysis from the Office of the Controller of Budget further highlights discrepancies between the counties' reported arrears and the figures disclosed by pension firms.

The total arrears, according to pension schemes, amount to Sh85.05 billion, which is broken down as follows: Sh48.79 billion owed to Lapfund, Sh32.35 billion to Laptrust, and Sh3.91 billion to CPF.