Every month, Kenyan employers take money out of workers' pay for their SACCO, their pension and their loans. Some of it never arrives. At the end of 2025, KES 3.92 billion taken for SACCOs had not reached them, the regulator says. KES 66.41 billion of pension contributions had not reached the schemes.
Most of it is owed by public employers: counties, public universities, state agencies. The worker has already paid. What they lose is a loan they cannot get, a pension that is short, or a dispute over a loan they thought they were repaying.
The Afronomics verdict: in our view, money taken from a worker's pay should reach its destination as surely as PAYE reaches KRA: the new at-source payroll is the right fix for new deductions in counties, but the billions already owed still sit with employers, and we found no dated plan to repay them.
What happened
FactsThe Sacco Societies Regulatory Authority (SASRA) says employers deducted KES 3.92 billion (KES 3,918.80 million) from workers' pay for SACCO savings and loan repayments in 2025 but did not pass it on. That touched 104,331 members, up from 55,602 a year earlier; the amount rose from KES 3.49 billion. Loan repayments made up KES 3.04 billion, or 77.55%. SASRA groups the money by type of employer and does not name employers. County governments and assemblies owed KES 1.88 billion, 48.09% of the total. Our brief on the SASRA figures has the full table.
FactsPensions are the bigger sum. A Retirement Benefits Authority (RBA) survey put unremitted pension contributions at KES 66.41 billion on 31 December 2025, Capital FM and Business Daily report. Public-sector schemes accounted for KES 61.8 billion of it, or 93%, across 51 schemes. Education institutions, largely public universities, owed KES 30.24 billion. County governments owed KES 20.42 billion. Private-sector schemes owed KES 4.6 billion.
FactsFor counties, the Controller of Budget, Margaret Nyakang'o, puts salary arrears and unremitted statutory deductions together at about KES 100.2 billion on 30 June 2026 (The Star reports KES 100.24 billion, The Standard KES 100.44 billion). County executives owed KES 98.44 billion and county assemblies KES 1.80 billion. More than KES 52.45 billion had been outstanding for at least three years. The deductions include contributions to LAPFUND, LAPTRUST and NSSF.
AnalysisThese counts overlap and measure different things, so we do not add them up. The Controller of Budget's figure mixes unpaid salaries with deductions. What they agree on is the shape: the money is owed mostly by public employers.
What the numbers show
| What was deducted | Owed at | Amount | Mostly owed by | Counted by |
|---|---|---|---|---|
| SACCO savings and loan repayments | 31 Dec 2025 | KES 3.92bn | County governments and assemblies, KES 1.88bn | SASRA |
| Pension contributions | 31 Dec 2025 | KES 66.41bn | Public-sector schemes, KES 61.8bn | RBA survey, as reported |
| County salary arrears and statutory deductions | 30 Jun 2026 | about KES 100.2bn | County executives, KES 98.44bn | Controller of Budget, as reported |
Sources: SASRA Sacco Supervision Annual Report 2025, Table 48; Capital FM and Business Daily on the RBA survey; The Star on the Controller of Budget. The rows overlap and are not a total.
AnalysisEducation institutions and county governments together owed KES 50.66 billion of the KES 66.41 billion in pension arrears, about 76%. In both the SACCO and the pension counts, counties are near the top.
Who loses
FactsSASRA says unremitted savings cut what a member can borrow, because a SACCO loan is pegged on the member's savings. Unremitted loan repayments, it says, put the member in conflict with the SACCO and leave the loan in default.
FactsFor pensions, the worker's own contribution is missing from the scheme, and so is the employer's.
AnalysisWhere penalties and interest are charged to public employers, they are paid from public money. So the worker loses first, and the taxpayer pays the fine.
What the law says, and what the employers say
FactsSACCO deductions are made on the member's written instruction to the employer, under a check-off. SASRA tells SACCOs to keep that instruction, the amount expected, and how long each deduction has been outstanding, because SACCOs without such records have lost court claims. We have not yet read the current wording of the Co-operative Societies Act's remittance section, so we quote no penalty for it.
FactsThe employers' side, as reported. The RBA itself says most defaults are in entities that depend on money from the Exchequer, where late Treasury releases disrupt statutory payments, Business Daily reports; it also points to weak spending controls, since the deductions are already in approved wage budgets. Governors have said that much of the pension debt was inherited from the defunct local councils, and that late releases from the National Treasury squeeze them.
What is being done
FactsAt source. A payroll system that went live in counties on 1 July 2026 links IFMIS, the government's payment system, with the Central Bank of Kenya, so that PAYE, pension contributions and other deductions are paid when salaries are processed, the Controller of Budget told the Senate Labour Committee, The Star reports. She said it does not clear existing debts.
FactsRecovery by KRA. The Kenya Revenue Authority (Amendment) Bill, 2026 (National Assembly Bill No. 28 of 2026) proposed letting KRA recover unremitted pension contributions with its tax tools: agency notices, garnishee orders and asset preservation, Capital FM reported in June. The President assented to the Bill on 16 October 2026, The Standard and Citizen Digital report. Their reports describe board changes; neither mentions the pension clauses, and a committee had recommended deleting some enforcement provisions. We have not yet confirmed whether the pension recovery powers are in the Act as signed.
Our verdict
OpinionIn our view, money taken from a worker's pay should reach its destination as surely as PAYE reaches KRA: the new at-source payroll is the right fix for new deductions in counties, but the billions already owed still sit with employers, and we found no dated plan to repay them.
A deduction is the worker's money from the moment it leaves the payslip. When it is held back, the employer is borrowing from its own staff, at no agreed rate and without asking. Most of the employers in these counts are public bodies. Their reasons are real: late Exchequer releases, debts inherited from the old councils. But those are reasons to fix the funding, not reasons for a worker's deduction to go unpaid.
Paying deductions at source in counties is the right design. It is also a test that can be marked within months: the Controller of Budget's first-quarter report for 2026/27 will show whether new arrears stopped. The old arrears are the harder problem. The new system does not touch them, we found no dated repayment plan, and we have not yet seen whether KRA's new powers made it into the law as signed. Until a dated repayment plan exists, the workers who are owed are, in practice, lenders to their employers.
What would change our mind
The Controller of Budget's next reports showing counties' arrears falling year on year, not just new arrears stopping. A published, dated repayment plan for county pension debt, with the schemes agreeing the amounts. And the RBA and SASRA counts at the end of 2026 well below their 2025 levels.
Information, not advice.