An audit has uncovered persistent irregularities in the pension system, raising fresh concerns over ghost pensioners, incomplete records, and questionable payments totaling billions of shillings. The Auditor General’s report for the financial year ending June 2024 reveals that gaps in records, delayed processing, and long-standing reconciliation issues have placed billions of shillings under intense scrutiny.
In her submission to Parliament, Auditor General Nancy Gathungu questioned the accuracy of KSh118.55 billion in pension payments. This figure includes KSh61.68 billion for civil pensions and KSh8.4 billion for military pensions.
“However, as previously reported, the payroll provided for audit review had some missing pensioners’ details, such as ID numbers, while some pensioner employee numbers had been recorded as DUMMY,” Gathungu said. “In the circumstances, the credibility and integrity of the pensioners’ data used for processing pension payments could not be confirmed.”
Pension payments represent monthly disbursements an employer makes to a retired employee upon reaching mandatory retirement age, voluntary retirement at 50, or due to injury, ill health, or restructuring. These funds also support the dependents of deceased officers.
The Auditor General further highlighted suspected fraudulent transactions, noting that the June 2024 bank reconciliation statement showed KSh15.64 billion in payments recorded by the bank but missing from the official cash book. Out of this amount, KSh14.89 billion has remained an unresolved mystery since 2008.
“Although management attributed this to fraudulent payments that were made through the CFS Pension and Gratuities bank account and that after investigations and court proceedings, the accused were acquitted, it was not clear why it had taken unduly long to clear the items from the bank reconciliation statement,” Gathungu said.
Past audit findings reveal a steady rise in returned pension payments, or re-credited cheques, which climbed to KSh7.1 billion in the 2023/24 financial year from KSh6.7 billion the previous year. Auditor General Nancy Gathungu attributed this growing balance primarily to the death of pensioners or a lack of claims from their dependents.
Alarmingly, she noted that the department lacks the actual cash in its bank account to pay out these returned pensions should the rightful beneficiaries come forward.
The audit further disclosed that some pension obligations have remained unpaid for over a decade. During the 2023/24 cycle, actual pension payments totaled KSh118.55 billion against a significantly higher budget allocation of KSh154.5 billion.
Significant delays continue to plague the system, with the average processing time stretching to 195 days. This figure far exceeds the National Treasury Service Charter’s 90-day requirement and the Citizen Delivery Charter’s 21-day target for complete documentation.
“The balance has been increasing mainly due to the demise of pensioners or the lack of claims by dependents. Further, the department did not have the funds in the bank account to pay the returned pensions if they were to be claimed by the beneficiaries,” Gathungu said.
The Office of the Auditor General linked these bottlenecks to internal inefficiencies, including late submissions and incorrect documentation from various government agencies.
