TUK pension crisis deepens as Sh6.43bn debt deadline expires in 30 days

The Technical University of Kenya (TUK) faces the threat of court action over Sh6.43 billion in unpaid retirement benefits after lawyers representing its staff pension scheme gave the institution 30 days to clear the arrears, adding to its growing financial troubles.

The university has until December 7, 2026, to pay the outstanding amount, which covers pension contributions deducted from employees' salaries but allegedly never transferred to the retirement scheme, alongside interest accumulated over more than a decade.

In a demand notice dated November 6, Long'et & Mumo LLP, acting for the staff retirement benefits scheme, directed the Vice-Chancellor to ensure the debt is settled within the stipulated period or risk legal proceedings.

The lawyers put the outstanding principal contributions at Sh3.04 billion, while accumulated interest stands at Sh3.39 billion. They warned that the interest would continue increasing until the university pays the entire amount.

Records attached to the demand letter show that the arrears began accumulating in July 2010. During the period, the university was expected to remit Sh3.48 billion in pension contributions but made payments totalling only Sh441.5 million, leaving approximately Sh3 billion unpaid.

The outstanding principal continued attracting interest, which had climbed to Sh3.38 billion by June 30, 2026, bringing the total liability to Sh6.43 billion.

The lawyers warned that failure to honour the demand by the December deadline would leave them with no option but to pursue recovery through the courts, including claims for further interest and legal expenses.

The pension dispute is unfolding as the university grapples with a wider financial crisis, having accumulated Sh12 billion in pending bills, raising fresh concerns about its capacity to meet its obligations.

A Senate report presented last month revealed the extent of the pension scheme's financial difficulties, showing that it had Sh6.83 billion in receivables as of April 2026 but only Sh907 million in available assets.

The report identified 1,850 members whose retirement benefits are affected by the shortfall. They include 1,299 employees still working at the university and another 551 deferred members.

With the scheme's available resources covering only about 13 per cent of members' accumulated benefits, thousands of workers face the prospect of receiving only a fraction of their expected retirement savings.

For instance, a member with pension benefits worth Sh1 million would be entitled to approximately Sh130,000 based on the funds currently available to the scheme.

The Senate findings also placed responsibility on the university for failing to fulfil its pension obligations over an extended period.

According to the report, TUK deducted pension contributions from employees' salaries for more than 15 years but did not remit either the workers' deductions or the corresponding employer contributions to the scheme.

The investigation further found that part of the money held by a local bank acting as the pension scheme's custodian was used to finance the university's operations, a move that went against pension regulations.

The scheme is currently under liquidation, with the outstanding contributions and interest forming a major part of the financial claims against the university.

The latest legal notice places TUK under pressure to address the pension shortfall within the next month, as questions persist over the fate of employees whose retirement savings have remained unpaid for years.