Economy

KNH explains Sh8.77bn pending bills for staff pension scheme

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Kenyatta National Hospital in this photo taken on December 10, 2019. PHOTO | JEFF ANGOTE | NMG

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Summary

  • The hospital’s management says the Sh8.77 billion pending bills as at June 2021 captured by the Health Sector Budget Proposal is as a result of a difference between the scheme’s current income and future funding obligations.
  • The Health Sector Budget Proposal Report said KNH had pending bills in relation to social benefits amounting to Sh8.96 billion.
  • KNH says the Sh191 million it owed NSSF emanates from contribution arrears between April 2001 and November 2009 when it unsuccessfully sought to be exempted from the statutory pension deductions because it had a "better pension scheme".

The Kenyatta National Hospital (KNH) management has come out to explain that it remitted all pension deductions to its staff pension scheme.

The hospital’s management says the Sh8.77 billion pending bills as at June 2021 captured by the Health Sector Budget Proposal is as a result of difference between the scheme’s current income and future funding obligations.

The Health Sector Budget Proposal Report said KNH had pending bills in relation to social benefits amounting to Sh8.96 billion.

KNH said it has a closed-to-new-member defined benefits scheme where staff contribute five percent of their basic salary with management topping it up with 10 per cent of the workers’ basic salary.

“We wish to state that the management has consistently and without fail remitted the above stated contributions to the scheme for the last 30 years and does not owe the scheme any unremitted funds,” KNH chief executive Evanson Kamuri said in a statement.

“[The Sh8.77 billion]…is an actuarial deficit in funding which is being addressed by further contribution of Sh100 million per year since 2014 and other remedial measures being worked on by the sponsor.”

The report, published by the Treasury ahead of the 2022/23 budgetary allocations, indicates Sh8.77 billion pending bills is in form of pension deficit in the KNH Staff Superannuation Scheme and remainder Sh190.83 million in arrears to National Social Security Fund (NSSF).

KNH says the Sh191 million it owed NSSF emanates from contribution arrears between April 2001 and November 2009 when it unsuccessfully sought to be exempted from the statutory pension deductions because it had a "better pension scheme".

This comes at a time when parastatals have come under increasing pressure to stop defaults on pension remittances which is becoming a nightmare for retirees.

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