Taxpayers paid pensions to the dead, says Auditor-General Edward Ouko

Auditor-General Edward Ouko has exposed gaps in the IT-based pension payment system that is being used to pay dead people retirement benefits.

Mr Ouko said the Pension Management Information System (PMIS) is able to capture, save and process pension payments with incomplete data, paving the way for dead people to be paid retirement benefits.

“[A total of] 4,477 dependents in the system were aged over 70. According to the pension policy, such dependents are required to provide life certificates every six months,” said Mr Ouko.

“However, the certificates were not provided as required and there is [a] risk of payments being made to deceased dependents.”  Kenya has struggled to maintain a clean pension and payroll book, leading to losses of billions of taxpayers’ cash.

A recent probe found 12,000 false names on the State payroll, and established that more than Sh100 million a month was lost in payments to “ghost workers”.

The government suspected that former workers were continuing to receive salaries after leaving the Civil Service or the pay was being pocketed by insiders.

MOUNTING PENSION COSTS

The pension department seems to be faced with the same problem at a time when taxpayers are facing mounting retirement costs.

Taxpayers in the year to June paid Sh50.8 billion to retired civil servants, up from Sh15 billion in 2002, underlining a growing taxpayers' burden of keeping former public servants comfortable.

(READ: Pension headache for State as 32pc of workers retire)

Mr Ouko said 69,715 pensioners’ files with dummy identification numbers were identified during a systems audit of the PMIIS.

“The audit also revealed that 601 pension files were being processed without pensioner’s names, 6,890 files without identification numbers and 6896 files without personal numbers,” Mr Ouko said in a qualified audit opinion of the national Treasury for the year to June 2015.

Mr Ouko said widows — who receive pension for five years after the death of the husband — are receiving the pay after the benefit period expires. 

He said 69,956 pensioners’ and their dependents’ files were showing the same date for pensioners’ dates of birth and dates of enrolment respectively. 

“Out of this total, 48,195 files showed that all dependents were born the same year, which is unlikely,” he said. 

CASE FILES MISSING

The auditor said 416 disability case files were missing from the master file. 

Mr Ouko said the PMIS does not include data for the period before 2009. “It is, therefore, not possible to verify information relating to pensioners prior to that year,” he said.

Estimates from the Treasury show that the annual pension bill will rise to Sh66.0 billion in the year ending June 2018, making it one the largest budget items.

The Public Service Commission said that nearly a third of civil servants are aged above 50.

This will derail government efforts to shift public spending to farming and building of roads, ports, railways and power plants, among other productive sectors, to jump-start the slowing economy.

At Sh50.8 billion, the pension bill for the year to June is more than the Sh42 billion that Kenya spent on health.

Kenya’s public workers have since independence enjoyed retirement benefits that are fully paid for by the taxpayers through the Consolidated Fund.