Some Sh400 million of pension money is in suspense accounts, some of it
because incompetent staff sent cheques to wrong address, the
investigation by the commission found. A department, which this year
will manage Sh26 billion for 180,000 pensioners, has only three
qualified accountants, according to a report of the investigation.
In its management ranks, there were 24 positions vacant. The
commission's report reveals that corruption networks have infiltrated
pensions, fleecing retirees of their benefits or delaying payment. It
also points to the possibility that the Pensions Department could be
paying millions to ghost pensioners in foreign countries.
In one case in the 2005/2006 financial year, the department sent Sh79
million to pensioners in the UK through an agency, without supporting
documents. Efforts by commission to get details of the UK pensioners
were fruitless and no one came forward to confirm receiving their
pension, according to the Report of the Examination into the Systems,
Policies, Procedures and Practices of the Pensions Department, Ministry
of Finance.
The payment of such pensioners in the UK without proper verification
of their existence is a loophole for payment of non-existent
pensioners, said the report, which was given to the department in
November 2008 but kept secret. The commission termed the payment an
abuse of the Government Financial Management Act of 2004, which
requires public institutions to obtain adequate supporting documents
for payments.
Payment of commission to agents is based on the pensioners paid and
this could be a double loss to the government in case ghost foreign
pensioners are paid, said the report. It also suggested that the
director of pensions stops payment of overseas pension where relevant
verification details and documents are missing.
The revelations would raise questions over the department's ability to
manage pension issues, especially with the expected contributory
pension scheme the government hopes to start in July. Already, the
Kenya National Union of Teachers has questioned how the new pension
scheme is going to be run and demanded that mechanisms be put in place
to ensure the money is safe.
Pensions Department spokesman Michael Obonyo said problems identified
by graft watchdog would all be solved by a new computer system, the
Pensions Management Department Information System. It will speed up the
processing of pensions and improve keeping of records. All manual file
information will be digitised to enable us access client information at
the touch of a button, he said.
Mr Obonyo said the department will be ready to manage the new
contributory pension scheme as we are putting in place many reforms
that will enable us handle as many clients as possible. The
commission's report said pensioners and some members of staff at the
pensions department were aware of corruption networks that delayed
payments.
They included brokers who worked with officers of the pensions
department to defraud retirees of their pensions. There were also
pension officers in the ministries and officers of the pensions
departments. Some networks were between relevant ministries' staff,
pensions staff and staff of the Kenya Revenue Authority who prepare
clearance certificates for pensioners.
To beat the cartels, the report proposed that the Finance permanent
secretary and other authorised officers in ministries ensure that all
members of staff who perform pensions duties are frequently rotated to
deter syndicated corruption. In some cases, the report said, members
of staff leaked information on payments meant for pensioners, including
amounts to be paid and the accounts where the cash would be channelled
to.
This exposes pensioners and dependants to various risks, said the
report. The report said the department had accumulated a huge suspense
account as a result of returned cheques because pensioners could not be
traced. The cheques were returned because accounts were closed or the
department was slow to respond to requests to send the money to a
different account.
Cheques have also been posted to the wrong address or pensioners have
failed to collect their money at designated paypoints, all contributing
to huge amounts being held in a suspense account. By mid 2007, Sh465
million went to the suspense account. The report recommended that the
department publish in the local newspapers names and relevant details
of pensioners whose benefits were held.
The pensions department should instruct banks to clearly give details
of the pensioners whose dues are returned to the department, said the
report. The report said Sh170 million against pension cheques dating
back to 2006, was being held at the pensions department.
Status of cheques
The money is in respect of cheques dispatched to various institutions
for payment of pensioners but they have neither been presented to the
bank for payment nor returned to the department. The department has
not made any effort to contact the institutions to establish the status
of the said cheques even though they are known to them, the report
said.
There are times when lack of adequate verification in calculating
pension arrears opens an opportunity for payroll officers to pay
exaggerated pension arrears in collusion with pensioners. The
commission proposes that PSs ensure employees are informed of their
retirement a year in advance to give time for processing pensions.
The department's budget, which stood at Sh23 billion during the
2007/2008 financial year, rose to Sh26 billion this financial period.
The report, completed in February last year, said the department
processes about 2,000 files for new pensioners monthly.
Daily Nation
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