Treasury unveils automatic pension deduction system to protect workers’ savings

The National Treasury has outlined fresh reforms aimed at ending delays in workers’ pension contributions by introducing an automated system that deducts and remits retirement savings during payroll processing.

Treasury Cabinet Secretary John Mbadi announced the reforms while appearing before the Senate Standing Committee on Labour and Social Welfare to present the Treasury’s submissions on a petition concerning the winding up and liquidation of the Technical University of Kenya Staff Retirement Benefits Scheme.

According to Mbadi, the reforms will integrate the Government’s Human Resource Information System (HRIS-Ke) with the Integrated Financial Management Information System (IFMIS) to automate the deduction and remittance of pension contributions.

“The reforms will facilitate the automatic deduction and remittance of pension contributions during payroll processing, enhancing transparency, reinforcing compliance and significantly reducing the risk of delayed or non-remittance of employees’ retirement savings,” Mbadi told the committee.

He said the government remains committed to protecting workers’ retirement savings through stronger policies, better governance and improved oversight of retirement benefits schemes.

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Mbadi added that although the regulation and supervision of pension schemes is the responsibility of the Retirement Benefits Authority (RBA), the Treasury will continue implementing reforms aimed at strengthening accountability and compliance across the sector.

The latest reforms build on the Treasury’s rollout of the Pension Administration System (PAS), a fully digital platform launched to replace manual pension processing and reduce delays that have affected retirees for years.

The new platform allows pension contributions to be processed electronically, enables public servants and retirees to track their pension records online, digitises claims and verification processes, and is expected to reduce cases of missing files, manual errors and delayed retirement payments.

The reforms follow years of complaints over delayed pension payments, late remittance of contributions and missing retirement records, with government audits revealing billions of shillings in unremitted pension savings across the public sector. 

The announcement also comes as authorities intensify efforts to clean up the government’s payroll systems. Last month, the Directorate of Criminal Investigations (DCI) launched investigations into suspected payroll fraud after a forensic audit uncovered irregularities amounting to Ksh6.2 billion.

The audit uncovered ghost workers, forged employment records, multiple salary payments and questionable banking details. It also found some employees had been registered before they were born or before reaching the legal employment age. 

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