Governors in crisis are pleading with the Treasury to pay and
rescue them as pension arrears hit Sh103.2 billion, threatening the retirement
future of as many as 200,000 workers.
Council of Governors chairman Ahmed Abdullahi said counties cannot
offset the debt from their current allocations, warning that failure by
Treasury to intervene could spell doom for them.
“Mistakes were made and in certain instances we just have to have
bailouts,” Abdullahi said during the Devolution Conference that ended in Homa
Bay on Friday.
Treasury Cabinet Secretary John Mbadi, however, slammed counties
for what he termed “criminal acts” that have jeopardised the welfare of
workers.
In a startling revelation, Mbadi said pension arrears had
ballooned from Sh23.3 billion in 2023 to Sh103.2 billion by October last year.
“Analysis of unremitted contributions submitted by Laptrust,
Lapfund, CPF, NSSF and the Public Service Superannuation Fund indicates that a
substantial portion of the debt is owed by county governments,” Mbadi said.
He termed the failure to remit pension deductions as outright
theft.
“If you are supposed to pay a salary to an employee and part of it
is pension, there’s no justification to pay half and hold onto the other half.
That is criminal,” the CS said, warning governors against mortgaging workers’
futures.
He described the practice as unfair and unjust.
“This money belongs to people who will one day retire. You are
killing their future. Please, whatever it takes, counties must now start the
culture of remitting all deductions promptly,” Mbadi said.
While acknowledging the magnitude of the crisis, the CoG boss
maintained that counties cannot shoulder the entire burden, especially
historical arrears.
“Part of this debt is historical and cannot be paid from the
current equitable share,” Abdullahi said, insisting that Treasury must
intervene.
The Senate County Public Investments committee in its tabled and
approved report in the House, shows the counties are yet to remit more than
Sh80 million to pension schemes as at March 2023. They include the Local Authorities Provident
Fund (Lapfund), the Local Authorities Pension Trust (Laptrust) and the County
Pension Fund (CPF).
Analysis by the Controller of Budget of data on outstanding
pension contributions, however, shows that arrears declared by the counties
differ from what is disclosed by the pension firms.
The crisis has already triggered institutional responses.
Last year, Mbadi formed an 18-member multi-agency task force on
Non-Remittance of Pension Deductions by County Governments to establish the
actual arrears and propose a repayment strategy.
“The object of appointing the task force is to actualise the
government’s commitment to the timely remittance of pension deductions to
pension schemes by county government entities,” Mbadi said in a gazette notice.
The task force followed a Senate resolution directing Treasury to
form a team to address the ballooning pension liabilities.
The team is to submit bi-weekly reports to the National Treasury
Cabinet Secretary and Senate on its activities.
The Senate County Public Investments Committee chaired by Vihiga
Senator Godfrey Osotsi had raised the alarm over the unremitted deductions.
“County governments have a long-standing problem with pension
remittances — both from defunct local authorities and from the devolved units
themselves,” Osotsi said.
The task force, chaired by Albert Mwenda, the Treasury’s director
of Budget, Fiscal and Economic Affairs, has been mandated with formulating a
payment framework to enable counties to clear outstanding arrears.
Other members include Albert Kagika (Director of Pensions,
National Treasury), Samuel Kiptorus (Intergovernmental Fiscal Relations
Department), Bernice Mwangi (Office of the Attorney General), Theodora Ochichi
(Office of the Controller of Budget), David Kitetu (Intergovernmental Relations
Technical Committee), and Moses Waitara (Local Authorities Provident Fund).
