The National Treasury is set to issue a Ksh 40 billion bond next year to address the long-standing issue of non-remitted pensions owed by defunct local and county governments.
This move aims to settle the combined pension debts amounting to Ksh 40 billion, which have accumulated due to unremitted deductions.
Hosea Kili, the Chief Executive Officer County Pension Fund (CPF), confirmed that the National Treasury has established a dedicated team to oversee the bond issuance. The decision follows advanced discussions between CPF and the Treasury, highlighting the urgency of resolving the pension debt crisis.
“The bond could be floated early next year, attributing the delay in pension remittances to the delayed equitable share allocations to devolved units. The non-remittance of these funds has significantly impacted the pension fund’s financial health and the beneficiaries reliant on these pensions” Kili stated
In addition to addressing the pension arrears, CPF is poised to expand its investment portfolio by entering the infrastructure financing market. This strategic shift aims to leverage increased investments in the African Finance Corporation (AFC), signaling a new direction for the pension fund’s growth and sustainability.
However, CPF has faced recent financial challenges. The net assets of CPF’s individual pension scheme fell to Ksh 2.9 billion in 2023, down from Ksh 3.1 billion in 2022. The decline is primarily attributed to poor returns from treasury bills and bonds, underscoring the need for diversification and strategic investments.
The forthcoming bond issuance and CPF’s foray into infrastructure financing represent critical steps in stabilizing the pension fund’s finances and ensuring the timely payment of pensions. As the process unfolds, stakeholders remain hopeful that these measures will provide a sustainable solution to the pension debt issue and enhance the fund’s overall performance.