Nairobi — President William Ruto has tasked all public institutions to develop a framework that will ensure all outstanding pension liabilities are paid up in full within the next two years.
Speaking during the Pension Sector Stakeholders Convention on Friday, Ruto noted that it is wrong for institutions to collect money from contributors and not remit it to pension schemes or SACCOs.
"I want the government and pension entities to agree on a framework for the payments to be done in two years," he said.
In the financial year ended June 2021, ministries and State agencies had social benefits arrears worth Sh20billion.
Further, the President said that the country's Sh8trillion debt is not sustainable noting that the government will not borrow externally anymore.
"I do this because I won't be the President who continues to take our country on the road of debt. This is an effort to reduce government borrowing," said Ruto.
He noted that the debt burden has the government using 60 per cent of its revenues to pay debt.
The President also said that the government would no longer borrow at the capital market in form of, Treasury bills and bonds, at a rate of more than 10 per cent.
"Whenever the government doesn't get that rate, it will seek alternatives elsewhere. The latest borrowing at the capital market was at 14 per cent, which is unacceptable. Treasury has been accordingly instructed," said Ruto.
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He encouraged players in the pensions industry to take advantage of that gap to be the investors in government projects, because ultimately, it's the Kenyans who will benefit from that position.
The President also committed to support the structuring of an instrument that pension can invest in.
Currently, there are projects worth Sh40billion annually available for pension funds to invest in, including roads and other public infrastructure.
The President also said that he would work with the sector to develop a plan to make it to mandatory for all employers to subscribe their employees to a pension scheme.
Retirement Benefits Authority(RBA) Ag.CEO, Charles Machira lauded the government's commitment to settle all outstanding pension debt within 2 Years.
On his part, CPF Financial Services CEO, Hosea Kili made a proposal to provide incentives to pension schemes that come together in the form of an umbrella arrangement for economies of scale.
