State corporations, government owned enterprises and semi-autonomous agencies' unremitted deductions to the NSSF and NHIF more than tripled to Sh716 million in the fiscal year ended June from Sh215 million a year earlier.
The rise in the deductions that failed to reach the National Social Security Fund (NSSF), and the National Hospital Insurance Fund (NHIF) signals the plight of public sector workers as well as the funding gap of the State-backed institutions mandated to fund retirement and healthcare.
The build-up of unremitted deductions to the NSSF for instance risks lowering pension payouts to workers of the State agencies upon retirement while undisbursed funds to the NHIF have crippled the fund’s ability to meet hospital claims.
Pending bills on unremitted cuts to the duo rose the fastest with arrears to the NSSF soaring by 251 percent to Sh640.9 million from Sh182.5 million last year.
Arrears to the NHIF, meanwhile, rose by 126 percent to reach Sh76.4 million from Sh33.8 million in June 2023 according to data from the controller of budget (COB).
Unremitted staff loan deductions, on the other hand, rose by 29.4 percent in the same period to Sh2.2 billion from Sh1.7 billion.
State agencies, however, marked an improvement in other pending bills relating to their workforce including unremitted pay as you earn (PAYE) tax deductions, unremitted sacco dues and pension arrears.
PAYE arrears have dropped to Sh19 billion from Sh20.1 billion last year, pension arrears have fallen to Sh33 billion from Sh46.8 billion while unremitted staff loan deductions are unchanged at Sh2.5 billion.
The rise in pending bills relating to NSSF, NHIF and staff loan deductions stands against government policy on clearance of outstanding arrears amid ongoing audit to verify pending national government bills.
“The national government policy on clearance of pending bills continues to be in force. The National Treasury is currently developing a comprehensive strategy to clear outstanding stock of verified pending bills of the national government over the medium term,” the National Treasury notes.
“In this strategy, deficiencies and lapses that led to the accumulation of pending bills will be addressed. In the 2024/25 financial year, all ministries and State departments are expected to clear all the expenditure carryovers from the 2023/24 financial year as a first charge before payment of commitments in the current financial year.” The sharp rise in unremitted deductions to the NSSF and NHIF is expected to increase the corporations’ long outstanding receivables.
The NSSF revealed Sh26.8 billion in contributions receivable for the financial year ended in June 2023.
An audit of the parastatal’s books uncovered a further Sh9.5 billion in long outstanding contributions receivable including Sh1.9 billion in mandatory contributions and Sh7.6 billion in accrued penalties which had not been included in NSSF’s statement of net assets in the period.
Employers failing to remit deductions to the NSSF are liable to a penalty of five percent of the unremitted contributions or Sh20,000, whichever higher.
The government is however yet to make disclosures on implementation of sanctions relating to pending bills.
The build-up of pending bills accruing to the NHIF comes amid the expected transition of the fund to the Social Health Authority (SHA) with civil servants currently registering to join the new fund by next month.
In the year to June 2023, the NHIF sunk into deficit as more members defaulted on monthly premium contributions.
The fund had targeted to collect Sh93 billion but only raised Sh82.1 billion as claims paid shot to Sh74.2 billion from Sh68.66 billion previously.
