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RBA targets to punish CEOs for unremitted pension billions
Retirement Benefits Authority CEO Charles Machira speaks during the Association of Retirement Benefits Schemes (ARBS) meeting where stakeholders discussed the future of Kenya’s retirement benefits sector at Radisson Blu Hotel, Nairobi Upper Hill on March 14, 2025.
Photo credit: Wilfred Nyangaresi | Nation Media Group
The Retirement Benefits Authority (RBA) is pushing for changes to the law to rein in the chief executive officers (CEOs) and accounting officers of State agencies who collected but not remitted statutory deductions, which have since stockpiled to Sh72 billion as of June 2025.
The retirement industry regulator also plans to enlist the help of the Kenya Revenue Authority (KRA) in its quest to collect the unremitted pension deductions.
The bulk of the unremitted funds, 98 percent, are linked to county governments and quasi-government institutions, including cash-strapped public universities and sugar millers.
RBA chief executive Charles Machira says that the proposed amendments to the RBA and KRA Acts are intended to penalise CEOs and accounting officers who fail to remit the workers' dues to the authority.
He attributes the surge in unremitted pension contributions to merely ‘indiscipline’ in the public sector, where funds allocated for salaries and wages are reallocated for other purposes.
“From where we sit, we have amended the law, or we are in the process of amending the law so that all employers, whatsoever, including CEOs who do not remit those contributions to be held accountable and to be punished from day one. We have also amended the law to empower KRA to collect any unremitted contributions with the necessary penalties on behalf of RBA and that has happened,” Mr Machira told Business Daily in an interview on Thursday.
“We have already taken the proposed amendments through public participation, and the Bill is already in Parliament. We want to hold all CEOs (who fail to remit contributions) accountable going forward when the law is passed. We want to cure this problem (unremitted pension contributions) by punishing the accounting officers and holding them accountable for not remitting the contributions.”
The regulator wants the RBA Act to be listed as one of the laws empowering the KRA to collect unremitted deductions.
According to the regulator, this will breathe life into existing provisions that allow the taxman to issue agency notices to holders of unremitted pension deductions and attach the bank accounts of defaulting employers.
If the proposal is adopted, the RBA Act will be added to the list of laws whose application is enforceable by the taxman, including the Traffic Act, the Second-Hand Motor Vehicles Purchase Tax Act, the Betting Lotteries and Gaming Act, and the Stamp Duty Act.
In Kenya, late remittance of pension deductions is penalised at the rate of Sh20,000 or five percent of the outstanding amount every month, whichever is higher.
However, the persistent rise in non-remittance suggests that the fine has failed to deter the vice, or that the entities involved are cash-strapped.
The unremitted pension contributions grew by 26.31 percent to Sh 72 billion in 12 months to June 2025, up from Sh 57 billion in June the previous year, according to the latest RBA data, exposing thousands of workers to the prospect of struggling in retirement.
“Yes, the figure has grown, and we agree, it is not that we are not enforcing mechanisms of remittance of the contributions. Why does this happen? It is purely an indiscipline because if you look at it from a government point of view, all government agencies have budgets that they prepare on an annual basis. Those budgets are remitted to the National Treasury for approval or through their line ministries,” says Mr Machira.
“We are enforcing by calling for them to submit a remedial action plan on how they will cure the problem and penalise them to the extent of what is not remitted so that members do not lose their investment income. So, largely the law would say that which you have not remitted shall be deemed to have earned an investment income.”
The accumulation of non-remitted pensions occurs in an environment where the sector is grappling with low savings.
While the International Labour Organisation recommends a minimum income replacement rate of 40 percent, Kenya is at 32 percent, meaning that most of the retiring workers will not be able to maintain their standard of living.
The pension coverage in Kenya is at 26 percent, showing that many workers, especially in the informal sector, are not saving for their sunset years.
Unremitted employer pension contributions are listed as the second biggest pending bills for parastatals after arrears owed to suppliers of goods and services and contractors.
