Mbadi vows action on counties withholding Sh40bn workers’ pension contributions

Treasury and National Planning Cabinet Secretary John Mbadi has criticised county governments for failing to remit pension contributions deducted from employees’ salaries, terming the practice illegal and a violation of workers’ rights.

Speaking in Kisumu during the 14th annual general meeting of the Local Authorities Provident Fund, Mbadi responded to growing concerns from the Kenya County Government Workers Union that counties have withheld more than Sh40 billion meant for employees' retirement benefits.

“This is not just unacceptable, it is unconstitutional,” Mbadi said.

“My office has finalised a report through a task force investigating delayed pension remittances across various schemes, and the findings will be presented to President Ruto this Wednesday. Thereafter, clear steps for recovery will be outlined.”

The CS assured that the report’s recommendations will be implemented in full to ensure pension contributions are submitted promptly going forward. 

He noted that the delayed payments had severely impacted the sustainability of pension schemes and the financial well-being of retirees.

KCGWU secretary general Roba Duba had earlier sounded the alarm over what he described as a long-standing failure by counties to remit funds, with some of the pension arrears dating back over 20 years, well before the onset of devolution.

“It is unlawful for county governments to deduct contributions from workers’ pay and then fail to remit those funds,” Duba said. 

“These deductions are meant to keep Lapfund running and to grow members’ retirement savings. Withholding them or redirecting the money elsewhere is a gross injustice.”

Duba urged CS Mbadi to take swift action to ensure members’ contributions are safeguarded, warning that the debt continues to grow due to interest and penalties. 

He insisted that deductions should be remitted immediately by the employer to avoid further losses.

Mbadi promised to engage with union officials to review the long-pending Collective Bargaining Agreement, which workers say has remained unchanged since 2012.

“I will sit down with the secretary general to discuss the CBA. I don’t want to make any public commitments before proper consultation,” he said.

The CS also commended Lapfund for its prudent financial management and investments that support government priorities such as affordable housing and job creation. 

He challenged other pension and insurance funds to explore Public-Private Partnerships to boost their growth and contribute to national development.

“Lapfund has set an excellent example by aligning with the government’s agenda. Corruption and misuse of pension contributions will not be tolerated under any circumstances,” Mbadi said.

The meeting drew participants from various counties and stakeholders within the pension and finance sectors, all calling for urgent reforms to secure the future of county government employees.