Unpaid pension deductions dropped to Sh66.41 billion in the six months to December 2025, offering a brief reprieve before tougher enforcement rules take effect, even as government institutions continued to dominate the list of defaulters.
Data from the Retirement Benefits Authority shows the arrears fell from Sh72.5 billion recorded in June, marking an 8.4 per cent decline over the period.
The easing came just ahead of proposals by the regulator to introduce stricter penalties, including higher fines and possible funding freezes aimed at curbing persistent non-remittance.
Despite the reduction, the public sector remains the main source of the problem. RBA figures indicate that State institutions account for 93 per cent of the outstanding deductions, leaving private employers responsible for only 7 per cent.
County governments, public universities and other State agencies top the list of entities that have failed to forward workers’ retirement contributions on time.
The unpaid amounts relate to money already deducted from employees’ salaries but not transmitted to their pension schemes. The delay denies schemes the chance to invest the funds promptly and affects workers’ retirement savings by slowing the growth of their benefits.
The December figure marked a turnaround from the sharp rise seen in the year to June 2025. During that period, unremitted deductions jumped by 26.3 per cent, climbing from Sh57 billion in June 2024 to Sh72.5 billion in June 2025.
RBA data shows most defaults are concentrated in institutions that depend heavily on exchequer allocations. In many cases, delayed disbursements from the Treasury disrupt statutory payments. County governments have been the most affected, facing late transfers, growing wage bills and mounting recurrent expenses.
The authority has in the past linked the continued failure to remit deductions to weak spending controls rather than lack of budget provisions.
Pension contributions are included in approved wage budgets, meaning the funds should be available once salaries are paid. However, deductions are often redirected to cover other pressing obligations, leaving pension schemes unpaid for extended periods.
The build-up of arrears has raised fresh concerns about governance and financial discipline in public institutions, with employees bearing the impact through delayed pension credits.
At the same time, the pension industry recorded strong asset growth.
Total pension assets increased by Sh600 billion in the year ended December 2025 to reach Sh2.8 trillion, up from Sh2.2 trillion the previous year.
The expansion reflects higher contributions and solid investment returns, amplifying the cost of delayed remittances on overall scheme performance.
