Sh67.9bn paid to fake pensioners, Ouko says

What you need to know:

  • Of the billions paid out, 962 claimants received Sh1.6 billion, which Mr Ouko said was made way before the end of their service dates.

  • Those paid were still in the payroll system, which means that they drew salaries despite getting their pension.

  • About 221,590 claimants with irregular or no tax pin got paid Sh44 billion, 7,166 others with irregular IDs were paid an undisclosed amount, with 232 claimants having shared Sh152.8 million.

The government lost at least Sh67.9 billion in irregular payments by pension schemes to undeserving claimants, a report by Auditor-General Edward Ouko says.

Mr Ouko, in the report tabled in the National Assembly on Tuesday, said that individuals at the Treasury may have used weaknesses in the Pensions Management Information System (PMIS) to irregularly authorise the payments.

FOOLPROOF

Mr Ouko further warned that the Sh86.8 billion expected to be paid to about 146,027 claimants in the next financial year could also be lost unless the system is fixed.

“The effect of the anomalies contained in the PMIS is irregular payments that have compromised operations and resulted in many beneficiaries waiting for too long to get paid,” Mr Ouko said.

The report, to be considered by the House Committee on Public Accounts (PAC), notes that integrity tests of PMIS — which contained 306,712 records of pensioners — revealed that the system fell short of the characteristics of a good system.

This is because it allowed irregular enrolment of pensioners, payment of lump sums even before the officials’ dates of exit, shared identification card (ID) numbers and tax personal identification numbers (PIN).

Further, he said that PMIS has not offered foolproof support in the processing and payment of pensions and gratuities and that is why the system allowed irregular entries and duplications in the information offered and processed. The Judiciary, ministries of Health, Foreign Affairs, Treasury, Water, Transport and the State departments of Prison, Social Protection and Teachers Service Commission are some of the affected departments.

NON-COLLECTED

Of the billions paid out, 962 claimants received Sh1.6 billion, which Mr Ouko said was made way before the end of their service dates.

Those paid were still in the payroll system, which means that they drew salaries despite getting their pension. About 221,590 claimants with irregular or no tax pin got paid Sh44 billion, 7,166 others with irregular IDs were paid an undisclosed amount, with 232 claimants having shared Sh152.8 million.

The irregular tax pins did not start and end with alphabets as required and did not have the required nine digits.

The report also shows that 419 claimants who were irregularly enrolled in the system have been paid Sh555.9 million, 273 enrolled after 2018 got paid Sh26.9 million, while 156 claimants are yet to be paid. Further, the audit revealed that 29,387 claimants shared 870 bank accounts and got paid Sh20.9 billion yet some of the account numbers do not follow conventional banking rules.

Some account numbers had letters such as “O” and were being shared by 26,121 people, while 213 claimants not on pensionable terms of service were paid Sh492.1 million.

The claimants are alleged to have been support staff. The audit also flagged lack of procedures to identify dead people. A review of samples from various banks between 2012 and 2016 revealed that the pensions department continued to pay dead pensioners and dependants. There is a likelihood that the banks do not return all the non-collected pension payments, hence dependants of deceased pensioners continue to receive payments indefinitely.