Headcount reveals 40,000 ghost pensioners on payroll

Taxpayers have been paying billions of shillings to ghost pensioners after a headcount revealed that about 40,000 retired civil servants are dead and remain on the state payroll.

The Pensions Department said Wednesday the two-month census that started in February did not capture about 50,000 pensioners, adding that it has confirmed that 40,000 of them are dead.

The State had been paying relatives and dependants 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 will stop wiring cash to the bank accounts of the dead retirees, estimated at about 20 percent of the 260,000 pensioners on the payroll.

The Treasury plans to stop wiring cash to the bank accounts of retirees who did not show up for vetting.

“We are doing data clean-up to establish the exact amount of cash we have been paying non-existent retirees,” 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 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 current 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. The auditor-general 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”.