The National Treasury has formed a task force to investigate the challenges facing public sector retirement schemes that continue to stockpile billions in unremitted arrears in civil servants’ contributions.
The Treasury said the probe would look into the financial status of public pension schemes and the financial risk posed by the defaulting agencies.
“Despite the existence of an elaborate framework for the management of retirement schemes in the Retirement Benefits Act and the attendant measures that have been put in place to promote financially sound retirement benefit schemes in the public sector, the National Treasury continues to receive applications for bailout from schemes that are insufficiently funded,” the Treasury said.
Inter-agency task force
“In light of the above, the National Treasury and Planning has constituted an inter-agency task force to comprehensively review the challenges facing public sector retirement schemes and recommend policy interventions to foster prosperity and sustainability of the sector,” it added.
Pending pension bills by State agencies have hit hundreds of billions, leaving thousands of retiring civil servants disadvantaged. For example, Kenyatta National Hospital and public universities top the list of State corporations that have accumulated more than Sh20 billion arrears in contributions to pension and medical cover benefits, pointing to a deepening liquidity crisis.
The defaults have worsened the country’s pension crisis and exposed thousands of workers to an uncertain retirement at a time the government resource envelope to shoulder the additional pension burden is fast wearing out.
Kenya’s pension bill increased by Sh39.5 billion in the 10 months to April this year, the steepest growth in five years, highlighting the growing pressure on the Exchequer in paying retired civil servants.
The latest data from the Treasury shows that Kenya spent Sh113.72 billion on pensions in the period under review, a 53 percent jump from Sh74.19 billion in the corresponding period last year.