Pensions Crisis at Treasury as Govt Seeks to Block Release of Funds for Early Retirees

In Summary

• A report by the Controller of Budget shows counties spent billions on non-essential expenses while development received minimal funding.
•  The National Treasury has delayed Ksh7.1 billion in pension payments, causing financial strain for retirees and raising concerns over pension management.
•  The government has launched a Ksh50 billion Nairobi River restoration project to improve environmental sustainability and public health.
• Kenya spent Ksh524 million on Raila Odinga’s AUC campaign, covering travel, accommodation, and publicity expenses.
• Excise duty collection stagnated due to low consumer spending and rising illicit trade, missing targets by Ksh13.67 billion.
• Civil servants have threatened to strike from March 18 over challenges in accessing healthcare despite mandatory salary deductions for the SHA medical scheme.
• RBA is pushing for a law change to restrict pension withdrawals before age 50, citing concerns over inadequate retirement savings.
• KeNHA has launched a scholarship programme for unemployed youth along the coastal corridor to support skills training and job opportunities.

The Retirement Benefits Authority (RBA) has proposed changes to pension laws to prevent workers from accessing their savings before turning 50, aiming to boost retirement security. Currently, employees under 50 can withdraw up to half of their pension when changing jobs, but RBA warns that this practice has weakened retirement savings, leaving many retirees financially unstable. The proposal, set to take effect in July, would require workers to wait until 50 to access their pension unless they face ill health or permanently leave the country. The move comes amid concerns that most senior citizens continue working due to insufficient pension funds, as reported by The Business Daily. 

A new report by the Auditor-General has revealed that the National Treasury has yet to disburse Ksh7.1 billion in pension payments, leaving many retirees struggling financially, with some having already passed away. The backlog, some of which has remained unpaid for over ten years, is attributed to a lack of funds and unclaimed benefits by dependents. The report also highlights delays in pension processing, with retirees waiting an average of 195 days instead of the standard 90 days, as reported by The People’s Daily. Additionally, discrepancies in pension records raise concerns over the integrity of the payment system. 

Kenya spent Ksh523.85 million on Raila Odinga’s unsuccessful bid for the African Union Commission chairmanship, according to fresh data presented to Parliament. The Daily Nation reports that the funds, approved under Article 223 of the Constitution, were used for chartering aircraft, hotel accommodation, airport transfers, and campaign publicity. The Parliamentary Budget Committee revealed that the money was drawn from the Consolidated Fund Services without prior parliamentary approval but within the constitutional limits. The spending report comes amid speculation on the campaign costs, with the government refuting claims that the bid cost Ksh13 billion.

In a report by The People's Daily, a new report by the Controller of Budget has revealed that county governments spent billions on non-priority expenses such as garbage collection, legal fees, catering, and allowances while allocating significantly less to development. Nairobi led in high spending on garbage collection (Ksh897.82 million) and legal fees (Ksh719.2 million), while Machakos and Homa Bay counties spent Ksh64.02 million on the Governor’s Cup. Other counties incurred large expenses on office supplies, insurance, routine maintenance, and hospitality, raising concerns over budget priorities. 

President William Ruto has launched a Ksh50 billion project to restore the Nairobi River Basin, which will be implemented by Energy China alongside an affordable housing initiative, as reported by Capital Business. The four-year project aims to clean up the heavily polluted river, construct a 60-km sewer line, and provide decent housing to flood victims. Funded by the Kenyan government, the project will include wastewater treatment plants, solid waste management, stormwater control, and landscaping to improve Nairobi’s environment and public health.

Tax collections from the sale and importation of beer, fuel, cigarettes, cosmetics, and cars remained nearly unchanged in the first half of the financial year, growing by just 1.11 percent to Ksh141.35 billion, missing the Ksh155.02 billion target by Ksh13.67 billion. The Business Daily reports that the slowdown has been linked to reduced consumer purchasing power, increased statutory deductions, and a rise in illicit trade, with industry players like EABL and BAT Kenya raising concerns over the impact on sales. The Auditor-General also flagged the disappearance of 9.6 million excise stamps, raising fears of tax evasion through counterfeit goods.

The Daily Nation reports that civil servants have issued a two-week ultimatum to the government to fix the troubled Social Health Authority (SHA) medical scheme or face nationwide protests starting March 18. Workers in both national and county governments are reportedly struggling to access healthcare despite double deductions from their salaries for the Social Health Insurance Fund (SHIF) and the Public Officers Medical Fund (POMF). Many are being forced to pay cash for treatment, as hospitals have refused to accept the scheme due to unpaid bills. The Kenya Medical Practitioners, Pharmacists and Dentists Union (KMPDU) and the Union of Kenya Civil Servants (UKCS) have warned that if the issue is not resolved, they will escalate the matter into a full national strike.

The Kenya National Highways Authority (KeNHA) has introduced a scholarship programme targeting unemployed youth along the coastal corridor, funded through a partnership between the Kenyan government, the German Development Bank (KfW), the European Investment Bank (EIB), and the EU-Africa Infrastructure Trust Fund (EU-AITF). The Star reports that the scholarship will cater for tuition, examination fees, training materials, and a monthly stipend for beneficiaries enrolled in six-month TVET courses at Kenya Coast National Polytechnic, Mazeras Youth Polytechnic, and Mariakani Vocational Training Centre. Applicants must be between 28 and 35 years old, residents of Jomvu, Kinango, Kaloleni, or Rabai, and have at least a KCPE certificate without formal diploma training.