State corporations will file monthly statutory and Sacco payment reports if Parliament approves proposed regulations by the National Treasury, aimed at taming the growing menace of pending bills.
Statutory payments are deductions from workers’ pay slips and include pay-as-you-earn (PAYE), National Social Security Fund (NSSF), and National Hospital Insurance Fund (NHIF) that are legally mandatory, and failure to register, deduct, and remit them to the relevant authorities attracts penalties and interest.
The Treasury has proposed that monthly payment records be presented to the Cabinet Secretary of the line ministry before the 10th day of the next month, in line with the Government Investment Regulations, 2024. Currently, this data is filed every three months in reports to the Controller of Budget.
“A State corporation shall submit a monthly statutory report to the ministry responsible for the State corporation…. with the following information, pending bills broken down into their components: trade creditors, pensions, taxes, Sacco deductions, and other pending bills,” reads the regulations currently open for public suggestions.
A host of State corporations are currently on the spot for failing to remit Sacco deductions, and statutory deductions like the NSSF, pension, and NHIF despite deducting them from the payslips of workers.
Records show that State corporations held Sh379.8 billion worth of pending bills as of June this year, amid claims of making discriminatory payments and concerns about the growth of fictitious claims payments.
State corporations hold the largest share of the pending bills at 73.6 percent of the Sh516.3 billion that is owed by the national government as of June 2024. This includes unremitted pension cash and Sacco deductions.
The arrears, which date back to the years of municipal and county councils before transitioning to the county system in 2013, add to the piling pending bills for the devolved units as a result of pay slip deductions that were not wired.
This includes Sacco contributions and PAYE deductions to KRA. The deductions not remitted to the Saccos, for instance, were estimated at Sh865.12 million last year, a significant 35.81 percent drop from nearly Sh1.35 billion in 2022.
“[The non-remitted funds] is significant enough to have negative financial impairment of the liquidity of the 10 County Government-based regulated Saccos which draws a majority of their membership from County Governments and Assemblies,” Sacco Societies Regulatory Authority said in its annual report published on September 11.
The Retirement Benefits Authority (RBA) also estimates that over Sh90.3 billion in pension savings for county staff had not been remitted to manager schemes.
The data from the RBA, however, contradicts a report from the Council of Governors to the Senate which put the arrears at Sh40.5 billion as of March 2023 with Treasury Cabinet Secretary John Mbadi revealing that he is setting up a team to verify the clashing amounts.
The discrepancy of Sh49.5 billion prompted the Senate Select Committee on County Public Investments and Special Funds, led by Godfrey Osotsi (Vihiga), to direct the Treasury to investigate the true position of the accumulated bills.
