Fraud drains Kenya’s pension and health insurance funds, citizens left struggling
Kenya's pension and health insurance systems were meant to bring people dignity in old age. But fraud, delays and broken promises have left retirees and patients paying with their savings — and even their lives.
For decades, Kenya’s public pension and health insurance systems promised workers security in retirement and protection during illness.
But for many citizens, those promises have turned into frustration and betrayal, as the money they faithfully contributed has been siphoned off by fraudsters within the system.
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In 2024, Auditor-General Nancy Gathungu reported more than 260,000 cases of fraudulent activities targeting pension schemes. Between 2013 and 2020, over Sh67 billion ($515 million, €442 million) was lost through fake pension payments.
Legitimate retirees have been left empty-handed, and some have died while waiting for the pensions they worked so hard to earn. One person DW spoke with declined to be quoted, fearing that speaking out would destroy their family’s remaining chance of ever being paid.
Others are less silent. John Wachira, secretary general of the Kenya Association of Retired Officers, told DW: "When you join the pension scheme, you're promised that when you retire, you will get your pension. And it will be regularly reviewed, so that if salaries are increased, your pension will also be reviewed. But that does not happen."
Instead of enjoying the fruits of their labour, many retired Kenyans face chronic delays, demands for bribes and opaque procedures that leave them feeling powerless.
Public deductions, private burdens
Payments into Kenya’s pension and health insurance schemes are mandatory. Pensions go through the National Social Security Fund (NSSF), while health coverage is provided by the Social Health Insurance Fund (SHIF).
Yet many citizens still pay for private insurance to guarantee access to care. This option, however, is limited to the middle and upper classes, as most Kenyans cannot afford to pay twice.
Wachira stressed that people expect pensions to ensure that "when you leave the service, you maintain a certain standard" — the same standard they had while working, which shouldn’t "drop down because of inflation."
But if contributions are compulsory and consistent while payouts are unreliable, the question remains: where does the money go?
How pension fraud drained billions
The 2024 Auditor General’s report exposed senior officials who colluded within the National Treasury to steal pension funds through nonexistent beneficiaries and duplicate accounts.
About 15,000 people benefited from fraudulent pension payments worth over $15 million. Some started receiving pensions before retiring; others bypassed required procedures. In some cases, names were added to the system after the fact to cover up fraud.
The report also cited delays, weak data systems, poor identification, and missing records. Irregularities were found across major ministries, including foreign affairs, social protection and the judiciary.
Even those who do receive pensions say payments fail to reflect the reality of inflation.
The scale of the problem is hard to measure, as most cases go unreported. But accounts suggest it cuts across social classes, hitting lower- and middle-income groups alike.
In one case that sparked national outrage, retired teacher Violet Akoth Nyatol lost over 2.4 million shillings after corrupt pension officials colluded with bank staff to divert her benefits — enough money to buy a small plot of land in her hometown.
Health insurance funds under fire
Kenya’s health insurance scheme has faced similar scandals. Health Cabinet Secretary Aden Duale recently admitted it was riddled with fraud.
On July 1, he announced that 35 hospitals had stolen more than $804 million from the health tax fund. Fraud within the National Hospital Insurance Fund (NHIF) has plagued Kenya since its creation in 1966, and despite its replacement in 2024 by the Social Health Authority (SHA), corruption and mismanagement persist.
Duale posted on X that fraudulent claims to SHA included "falsifying records, inflating and phantom billing, upcoding (when a provider bills for a more expensive procedure) and converting outpatient visits into costly inpatient claims."
For Kenyans like Geoffrey Mwaniki, the failures are personal. He was admitted to Moi Referral Hospital in Eldoret on July 1 but had to pay his bills out of pocket despite making monthly contributions.
SHA officials told him the system was down and could not generate a password to release funds. When it later came back online, they refused to handle cases submitted during the downtime.
The problem, Mwaniki believes, was deliberate: "The system was not by coincidence, but it was by design… to keep patients from accessing their money."
"It really killed me, because I had to borrow some money to offset my bill so that I could be discharged from the hospital," he said. If given a choice, he would drop SHA insurance, but "it is mandatory."
Digitalisation: a solution or another promise?
To combat fraud and delays, the government has pledged to fully digitise pension payments starting July 1, 2025. Treasury Cabinet Secretary John Mbadi told senators that the manual system not only slows down disbursements but also exposes retirees to fraud.
Yet public unrest earlier this year shows many Kenyans have already lost confidence in government policies — especially in mandatory social security systems that take contributions but often fail to deliver.
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