University of Nairobi retirees could
walk home empty-handed after
years of service following a financial
mess at the institution.
A new audit has revealed that the university has yet to remit more than Sh7.2 billion to its workers’ pension scheme.
Auditor General Nancy Gathungu has flagged the anomaly in her review of the pension scheme’s books as of June 30, 2024.
The books revealed that UoN, as the main sponsor, owed the scheme Sh7,223,501,000 – an increase of Sh1 billion from the previous year’s balance.
Gathungu revealed that the contributions owed date back to November 2016, lifting the lid on the workers’ struggles since then.
It is emerging that a remedial plan prepared by the university council and approved by the Retirement Benefits Authority was yet to be adhered to.
The plan was approved in October 2019 and required the university to remit contributions to the tune of Sh50 million every month. Had it stuck to the plan, the varsity would have cleared the outstanding arrears by September 2025, according to the audit report.
Gathungu reports that auditors established that the university management in May 2020 requested RBA to suspend the monthly payments.
It cited the closure of all learning institutions following the outbreak of the Covid-19 pandemic.
RBA, details show, requested the university to prepare a feasible remedial plan in the face of its request.
“As at the time of the audit in September 2024, the university had not remitted the targeted amount to the scheme and did not provide a revised plan for settling the long overdue employer contributions to the scheme,” Gathungu said.
The auditor added, “It was also noted that the valuation of contributions receivable from the sponsor has also not been done in accordance with financial reporting standards.”
Gathungu says that “in the circumstances, it was not possible to confirm the regularity and valuation of the contributions from the University of Nairobi.”
Public universities in Kenya are in a dire financial crisis, rendering them unable to meet their financial obligations.
Latest Treasury disclosures revealed that the debts owed by the institutions of higher learning, which include pension arrears, totalled about Sh60 billion.
This is amid no clear strategy to turn around their fortunes and return them to profitability.
Parallel courses, which were the main cash cow for the varsities, were abolished.
Amidst its cash woes, the pension scheme has been flagged for failing to collect revenue from its core assets, the amount standing at Sh195 million in the period under review.
Details show that Sh111 million is in rent arrears from Ambank House and Sh4 million from Unipen apartments. Some Sh89 million, which was to be collected from the two assets was found to be outstanding for a longer period.
Gathungu has cast doubt on the ability to recover the amount, adding that its accuracy cannot equally be confirmed in the ensuing circumstances.
The pension scheme’s management has further been put on the spot over a possible loss of Sh7 million in a botched enterprise resource planning (ERP) system.
The audit reveals that the scheme was in the process installing another system for Sh13 million, which has equally delayed hence at the brink of failure.
It emerged that while the varsity agreed with the contractor to install the ERP system within six months from October 2022, the same was yet to be completed in September 2024.
Gathungu said the managers did not provide for audit review, details including status reports, follow-up and inspection minutes and contract agreement.
It was in the review that it was established that the scheme had terminated the initial contract and the contractor had sought out-of-court settlement.
“In the circumstances, it was not
possible to determine whether the
scheme received value for money
on the expenditure of Sh7,162,000
incurred on the terminated contract
and Sh13,359,789 incurred on
the procurement of the pension
software under the new contract,”
the auditor said.
