Timely pension remittance the key to secure retirement benefits

The growth of pension scheme membership to about 7.71 million workers.[File, Standard]

Increased pension scheme membership, now standing at about 7.71 million Kenyan workers, is a commendable achievement. Employees contribute to pension schemes with a promise that when they can no longer work, that money will be waiting for them. For a growing number of workers, that promise will be realised based on timely contributions. The law and regulations on pension schemes in Kenya provide guidelines and remedies on contributions.

The pensions sector has witnessed tremendous gains in the last 25 years, including transformation of public sector pension provision. Key among these is the shift to defined contribution pension schemes where members’ benefits are informed by investment returns. Therefore, for every shilling not remitted, a member loses the principal and also years of compounded investment income they can never recover. Employers should therefore make a deliberate effort to remit on time so as not to jeopardise the wellbeing of their employees. 

The Retirement Benefits Authority’s data shows that unremitted contributions across Kenya’s retirement benefits sector stood at Sh73.14 billion in December 2025. These figures include real deductions taken from workers' payslips that were never transferred to the schemes meant to grow and safeguard them.

The credibility of the sector rests on employers’ remittance as a non-negotiable obligation rather than a discretionary expense to be deferred when budgets tighten.

When payroll deduction are directed towards other pressing costs, it implies quietly borrowing from their own employees' futures, without consent and without collateral.

It is worth reflecting on what the Ksh73.14 billion represents, not just as unpaid contributions but as foregone investment income.  Pension schemes do not hold members' contributions in cash. Schemes invest members’ contributions in line with the investment guidelines issued by the RBA, and as per individual schemes’ prudent investment policy.

Had the Ksh73.14 billion been remitted to pension schemes, it would have been invested in a mix of assets classes including government securities, equities, immovable property, offshore, private equity and other alternatives.  This will in turn deepen the capital markets and propel economic development arising from pension savings.

Applying the industry’s reported investment performance for the period, in which the sector’s investment income reached Sh291.5 billion against an asset base of Sh2.5 trillion, that Sh73.14 billion would have generated Ksh8.4 billion in investment income, an 11.5 per cent return.

Assessing the performance of this portfolio using reported industry actual asset class returns, the assets would have generated 13 per cent in Government securities, 10 per cent in guaranteed funds, 48.9 per cent in quoted equities, 6 per cent in immovable property and 11.5 per cent in offshore and other alternatives. Members would have earned Ksh11.48 billion in investment income, a 15.7per cent blended return.

This dimension of the remittance gap throws workers' trust of the pension system in the balance. Trust is the single most important asset a pension scheme holds, perhaps even more than the assets under management.  Workers who discover at retirement that their years of deductions were never remitted do not simply lose money; they lose faith in their employers and pension schemes.

Pension schemes have a duty to press for full and timely remittance from employers, but we also have a duty to be transparent to our own members about compliance levels. Members' trust should be earned through visibility rather than assumed through silence. 

RBA has proposed a statutory clearance mechanism in which sponsoring employers would only access disbursements or statutory funds from the National Treasury upon proof of full compliance with their remittance obligations. RBA has also proposed enhancing penalties and personal liability for the accounting officers responsible for defaults. 

The Kenya Revenue Authority (amendment) Bill, 2026, would extend to KRA the enforcement toolkit it already applies to tax defaulters. This means the government is moving to treat an unremitted pension contribution with the same rigour as it treats an unpaid tax bill.

Closing this remittance gap will require three things working in harmony. First, proactive enforcement so that the cost of non-remittance is higher than the short-term convenience of withholding a remittance. Second, personal accountability so that non-remittance is not hidden behind institutional anonymity. Third, pension schemes need to embrace transparency to members so that members can access the contributions history. 

The writer is the Chief Executive Officer of the Public Service Superannuation Fund (PSSF)