Jacob Mugadia worked for the government until 2012 when he retired to his sleepy village of Demesi in Vihiga county.
He died five years later in road accident on the way home from Nairobi where he had gone to follow up on his pension dues.
“Our father, who diligently served this nation, died before touching a single shilling of his pension. My siblings and I have been following up on the same without success, despite presenting the relevant documents,’’ says Mugadia’s daughter, Jane Migare, fighting back tears.
It is a similar story for Duncan Orwa, 65, a retired driver at the Ministry of Agriculture, who is languishing in abject poverty in his native Gendia village in Kendu Bay. He is battling a terminal illness.
“I’m sick and tired of chasing the money. I have filled a dozen documents but the clearing process keeps getting tougher by the day. I’m a dying man; maybe I should just focus on meeting up with my creator. This pension thing is not forthcoming,’’ Orwa told the Star on phone.
His son, Patrick, explained that his father shares an ID number with two other people as per pensions documents. “This is what he has been clearing for the past five years. The process is extremely slow.”
These two cases represent thousands of retirees and millions of dependents frustrated by inefficiencies at the Civil Servants Pension Scheme, characterised by delayed disbursements, missing data, lack of transparency and blatant fraud often flagged in the Auditor General’s annual reports.
In the last financial year, Auditor General Nancy Gathungu revealed that payments amounting to Sh350 million were made to 2,950 deceased claimants, with a further Sh7.3 billion disbursed to pensioners and dependents with questionable identification details.
The audit pointed out the system's records were incomplete and inaccurate regarding essential information like tax PINs, ID numbers and birth dates.
"Incomplete or inaccurate data may lead to errors and fraud in pension processing and administrative inefficiencies, hence financial loss arising from irregular payments," Gathungu says in the report.
It is no wonder that Kenyan retirees are among the poorest globally, with a new report by Allianz pointing to an ineffective pension system that has seen a lot of senior citizens continue working well into their last years.
Another study by the Kenya National Bureau of Statistics conducted in 2023 shows 82 per cent of senior citizens are working for basic needs amid financial struggles, an indictment of the inadequacy of the country’s pension and coverage of retirement benefits.
Last year, retired teachers petitioned the National Assembly to establish the causes of delays in paying their retirement benefits.
In a petition presented to the House on their behalf by Mwatate MP Peter Mbogho, the retired teachers claimed some of them have never been paid.
“Some of the retired teachers have neither been communicated to be their employer, TSC, up to date nor paid their monthly pension and the lump sum for the services they offered during their years of service,” the petition reads in part.
They said continued non-payment of retirement benefits and pensions has subjected them to live in a deplorable state.
Former employees of the Kenya Railway Corporation are suffering a similar fate, with John Mwangi from Kenol who retired in 1998 saying he has not seen a coin for 13 months now.
He says petitions to Parliament and occasional protests against inefficiencies at the Kenya Railways Staff Retirement Scheme are yet to yield anything.
The government has acknowledged the concern and is conducting a fresh headcount of retirees to streamline records and weed out ghost pensioners who continue to pocket billions of taxpayers’ money.
The pensions department at the Ministry of National Treasury and Economic Planning issued a notice calling on retirees to self-register via E-citizen and Huduma Centre before February 28 as part of records cleaning.
National Treasury PS Chris Kiptoo said the deadline is non-negotiable and those who will not have registered will be locked out.
This is the second time in five years the government is trying to clean up pensions records, which are currently manual with errors ranging from duplication and missing details to mixed data among other inefficiencies that have aided fraud and slowed disbursements to beneficiaries.
The 2019 national census showed at least 40,0000 ghost pensioners were pocketing billions monthly, a revelation that shocked the International Monetary Fund which has asked Kenya to clean up the records as part of fiscal realignment.
The exchequer says automation is part of the government's broader strategy to reduce wasteful spending and streamline public finances.
It includes features such as an online submission platform, a self-service portal, real-time monitoring and enhanced security.
The government believes this will not only streamline pension administration but also enable the timely payment of pensioners.
"This deadline is not negotiable and it will serve as a vital statement in our effort to modernise and streamline pension administration," Kiptoo said.
"Kindly, note that any pensioner who does not complete their registration by the specified date will face suspension from the payroll."
The rising pension liabilities, alongside debt repayment costs, are giving President William Ruto's administration sleepless nights, with more employees hitting retirement age.
State data shows 30,155 workers were expected to leave work by end of June 2024, with the number expected to fall to 28,745 in 2025 and 26,500 in 2026.
This pushed pension liability for the year ended June 30, 2024, to Sh189 billion and a further increase of Sh207 billion for the new financial year 2024-25.
Despite the current crisis, there is yet a new proposal submitted to Parliament to reduce the mandatory retirement age from 60 to 55 years.
The Public Service Commission (Amendment) Bill, 2023 is intended to create employment opportunities for younger individuals and foster professional growth within the public service.
However, players in the pension space have already raised objections to the plan.
“Lowering the retirement age would result in shorter contribution periods and longer payout periods, likely leading to lower monthly retirement benefits and increased financial strain on the pension fund,’’ CPF CEO Hosea Kili told journalists last year.
He said addressing these challenges proactively is essential to ensure financial security in retirement for the scheme members.
Another pain that the government will have to bear is the amendments to the Pensions Act that seek to peg pensioner’s annuity to inflation adjustments.
The proposed law seeks to amend the Pensions Act to include automatic cost of living adjustments to the pensions earned by all retired public servants.
The Kassim Tandaza-sponsored bill further seeks to provide for the use of the most current salary applicable to a job group as the basis for calculation of the pension payable to the public servant who is retired in the job group or its equivalent.
As the government digitises pension services, it is Eliud Kihara's hope that his late father's dues will be disbursed, ending a four year delay that has caused him time and peace of mind.
