Economy

Auditor-General report sparks fears of fictitious pension claims

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The National Treasury building in Nairobi. FILE PHOTO | NMG

Taxpayers could be losing billions of shillings annually due to weak systems for payment of pension claims at the Treasury, the auditor general has warned.

A performance audit has revealed that the Pensions Department (PD) at the Treasury does not compel retirees and dependents to present life certificates before payment is made.

According to the audit, in case of death of a pensioner, the Pensions Department relies on family to alert it on the occurrence, armed with the death certificate and the pension number of the deceased for certification.

“Interviews with staff at the Pensions Department disclosed that pensioners and dependants do not present life certificates and neither do the PD follow up to have them submitted,” read the audit report.

This means that the State could be paying relatives and dependants of dead people retirement benefits, helped by the growing use of debit cards and mobile banking, which do not require the physical presence of beneficiaries in banking halls.

The audit also shows there are no triggers in the system for payment to be stopped after a certain period to necessitate proof of life.

To correct the anomaly, the Auditor-General recommends that the Pensions Department works with the Civil Registration Department to get monthly data on registered deaths.

The report comes after a headcount at the Pensions Department revealed that about 40,000 retired civil servants are dead but remain on the State payroll.

The two-month census that started in February last year did not capture about 50,000 pensioners, adding that it has confirmed that 40,000 of them are dead.

The headcount was informed by the need to curb the ballooning pensions bill that increased 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.

However, the automation of the banking sector and extending the payments to Kenya’s 42 banks has reduced the need for pensioners to collect their benefits from tellers.