Unpaid remittances to the National Social Security Fund (NSSF) rose to a cumulative Sh5.1 billion in the year to June 2025, laying bare the growing backlog of workers’ retirement savings that have yet to reach the fund.
For the period under review alone, Sh2.03 billion went unremitted, split evenly between Sh1.01 billion deducted from employees and a matching Sh1.01 billion owed by employers. The arrears represent a sharp increase from Sh3.14 billion recorded the previous year.
When employers deduct NSSF contributions but fail to forward them promptly, employees lose out on potential investment returns, effectively shrinking their future retirement benefits. The mounting arrears come at a time when monthly deductions are rising, with contributions set to reach as much as Sh6,480 per employee.
According to its latest annual report, the fund has imposed penalties amounting to Sh11.6 billion on the outstanding sums. These fines, however, have not been recognised in the financial statements on prudence grounds. NSSF says it is pursuing recovery through alternative dispute resolution, litigation and intergovernmental technical committees, particularly where defunct local authorities are involved.
Under the NSSF Act, employers who default face a monthly penalty of five per cent of the unpaid contribution, compounding until settlement. The challenge of unremitted statutory deductions extends beyond NSSF. The State’s Public Service Superannuation Scheme has similarly faced shortfalls, with the Auditor General reporting Sh1.2 billion in unremitted contributions for the year to June 2025.
Delays in forwarding deductions reduce the time available for the funds to generate returns, undermining workers’ retirement security. Despite the arrears, NSSF’s total collections climbed significantly to Sh81.9 billion during the year, up from Sh59.1 billion previously, reflecting higher contribution rates. Of this amount, Sh28.8 billion was classified under Tier I and Sh52.5 billion under Tier II, alongside smaller sums directed to the old and new provident funds.
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The Retirement Benefits Authority has indicated it is pushing for legislative amendments to hold chief executives and accounting officers personally accountable where statutory deductions are collected but not remitted. As of June 2025, total unremitted contributions across the pension industry stood at Sh72 billion, with 98 per cent linked to county governments and quasi-government entities, including financially strained public universities and sugar companies.
The regulator is also considering collaboration with the Kenya Revenue Authority to strengthen enforcement and recover outstanding pension contributions.
