By Benadeta Mwaura - Reporter
Kenya, 15 December 2025 - The Kenyan government has failed to remit KSh 1.2 billion in pension contributions owed to the Public Service Superannuation Fund (PSSF), raising fresh concerns over the stability of the country’s retirement benefits system and the potential long‑term loss of savings for civil servants.
According to the Office of the Auditor‑General, the PSSF held an outstanding KSh10.6 billion in unremitted employer and employee contributions by June 2025 due to the State’s failure to remit deductions on time. Of this, the government settled KSh 9.38 billion by the end of August, leaving about KSh 1.2 billion still unpaid at the time of the audit.
The Pension Fund Act requires deductions from civil servants’ salaries, representing both employee and employer contributions, to be paid into the pension fund within ten working days after the end of the month in which they accrue.
The delayed remittance constitutes a breach of this statutory obligation, potentially undermining workers’ retirement benefits.
Auditor‑General Nancy Gathungu underscored the financial and legal implications of the delays in a recent audit report, warning that the pension fund could lose returns that would have been earned had the contributions been remitted on time.
“Unless the outstanding balance is paid together with the penalty provided for under the Act, contributors stand to lose returns that would have been earned had the contributions been received in time,” she said, highlighting risks not just to individual civil servants but to the broader pension fund’s investment capacity.
Pension industry stakeholders have expressed alarm at the trend of delayed government remittances, pointing to serious consequences for savers and for the broader economy.
Pension funds are significant institutional investors in Kenya’s financial markets, buying government securities, supporting infrastructure projects, and providing liquidity to capital markets.
“Pension funds are the backbone of Kenya’s long‑term investment base. They buy government bonds, finance infrastructure projects, and provide liquidity to real estate and equity markets. When contributions fail to arrive, funds lose investable cash,” said Simon Wafubwa, Managing Director of Enwealth Financial Services Limited.“Some are forced to liquidate assets prematurely or slow down new investments.”
In response to the increasing burden of unremitted pension deductions, the Retirement Benefits Authority (RBA) has embarked on efforts to strengthen compliance among employers, including State agencies, who collect statutory deductions but fail to pass them on to pension custodians.
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RBA has indicated plans to involve the Kenya Revenue Authority (KRA) in recovering outstanding pension contributions and levying penalties on defaulters.
“We are in the process of amending the law so that all employers, whatsoever, including CEOs, who do not remit those contributions will be held accountable and punished from day one,” RBA Chief Executive Charles Machira said in a previous interview.“We have also amended the law to empower KRA to collect any unremitted contributions with the necessary penalties on behalf of RBA.”
The trend of delayed remittances is not unique to the civil service scheme.
Other public and quasi‑public entities in Kenya have struggled to remit statutory deductions, with retirees and pensioners complaining of long periods without full payout, leading to protests and court actions in some cases.
Authorities and lawmakers have also grilled pension regulators over delayed payments of retirement benefits where funds were deducted but not remitted to the respective schemes or custodians.
The government’s arrears to the PSSF add to a growing backlog in pension obligations that threatens public confidence in retirement systems and could weaken long‑term savings.
As pension funds play a key role in financing development and serving as stable institutional investors, effective compliance with remittance laws remains central to ensuring retirement security for workers and maintaining confidence in Kenya’s financial sector.
