The amount of pension deductions withheld from workers' salaries but not remitted to retirement schemes rose to Sh85.2 billion by the end of December 2025, highlighting growing concerns over the security of employees' retirement savings and prompting plans for tougher action against defaulting employers.
New data released by the Retirement Benefits Authority (RBA) shows the unpaid pension deductions increased from Sh69.4 billion recorded at the close of 2024.
The unpaid contributions represent money already deducted from employees' salaries but not transferred to pension schemes, denying workers investment returns that would have grown their retirement savings over time.
The regulator's figures show that most of the outstanding balance consisted of contributions that had remained unpaid for more than 30 days. These arrears climbed to Sh73.1 billion in 2025 from Sh69.4 billion the previous year.
"Unremitted contributions, especially those overdue by more than 30 days, accounted for most of this balance each year. By 2025, these unremitted contributions reached Sh73.14 billion, nearly tripling from Sh25.35 billion recorded in 2021," the RBA said.
While long-overdue contributions continued to rise, the report shows that contributions pending for less than 30 days dropped slightly from Sh14 billion to Sh11 billion during the year under review.
Occupational pension schemes carried the largest share of unpaid contributions, accounting for Sh63.8 billion. This represented more than four-fifths of all arrears that had remained outstanding for more than a month.
Umbrella schemes followed with Sh4.2 billion in overdue contributions, while statutory schemes accounted for Sh5.2 billion.
The data also shows that defined contribution schemes bore the largest burden of delayed remittances, with Sh66.5 billion remaining unpaid for more than 30 days. Pension schemes accounted for Sh44.3 billion of the arrears, while provident funds made up Sh28.8 billion.
The increase in unpaid pension contributions comes as the government moves to strengthen enforcement against employers who deduct retirement savings from workers' salaries but fail to remit the money to pension schemes.
Under the proposed Kenya Revenue Authority (Amendment) Bill, the Kenya Revenue Authority will be allowed to recover unremitted pension contributions using the same powers it applies to tax defaulters.
If the proposed law is passed, KRA will be able to freeze bank accounts, issue agency notices, seize assets, restrict access to funds and deactivate the tax PINs of employers who repeatedly fail to remit pension deductions.
The RBA says stronger enforcement is necessary because the current penalties have failed to stop the growing problem of unpaid pension contributions.
The regulator has also proposed tougher penalties, including higher fines and holding chief executive officers and accounting officers personally responsible for repeated failure to remit workers' pension savings.
Kenyan law requires employers to remit both employees' pension deductions and their own contributions within the prescribed timelines. Those who fail to comply face penalties, enforcement measures and recovery of the outstanding amounts by both the RBA and KRA.
When pension deductions remain with employers instead of being invested by retirement schemes, employees lose years of compounded returns, reducing the value of their retirement savings.
The challenge remains most common in public institutions, particularly county governments, public universities and other State agencies, where delayed Treasury disbursements and budget constraints have continued to fuel persistent non-remittance despite deductions already being made from workers' salaries.