Economy

15,000 dead pensioners axed from State payroll

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The Treasury has stopped wiring cash to the bank accounts of the dead retirees. FILE PHOTO | NMG

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Summary

  • Treasury plans to recover amounts from future payouts to beneficiaries.

The Treasury has removed 15,000 names from the pension payroll after a headcount revealed that they were dead people, costing taxpayers billions of shillings in payments to ghost pensioners

The Pensions Department said Friday that it has confirmed with the register of deaths that 5.7 percent of the 260,000 pensioners are dead.

A two-month census that started in February did not capture about 50,000 pensioners and 15,000 of them are confirmed dead when compared with those already issued with death certificates.

The State had been paying relatives and dependents of dead people retirement benefits, helped by the growing use of ATM cards and mobile banking, which do not require the physical presence of beneficiaries in banking halls.

The Treasury has stopped wiring cash to the bank accounts of the dead retirees and will recover the lost billions through future benefits.

The law allows the spouses of dead retired civil servants to access their pension five years after death and thereafter will continue to earn a fraction of the payout for the rest of the lives under an account dubbed Widows and Children pension.

“We have removed 15,000 dead people from the payroll and will recover the excess payment from future benefits like Widows and Children pension,” said a top Treasury official familiar with the census.

“Mobile banking and use of ATM have raised the risk of payments being made to the deceased’s dependants. It has made it easier to withdraw the benefits on behalf of beneficiaries.”

The Widows and Children pension account consumed Sh2.8 billion in the year to June and has been allocated Sh4.3 billion in the current year.

The headcount was informed by the need to curb the government’s ballooning pension bill that will increase to Sh104.4 billion in the year starting July, up from Sh86.2 billion in the previous year and Sh15 billion in 2002.

Most pensioners were previously paid through the State-owned Postbank, which demanded that the retirees appear in person to withdraw their benefits. But the automation of the banking sector and extending the payments to all of Kenya’s 42 banks has in recent years reduced the need for pensioners to collect their benefits from tellers.

The Auditor-General, in a 2015 report, warned that advancement in the banking sector and an ageing pension payment system had made it difficult for Kenya to maintain a clean retirees’ payroll, leading to the loss of billions of shillings in taxpayers’ cash.