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  • Writer's pictureGregory O Manyala

Recovery of unremitted Pension contributions by Pension funds – Key changes under Finance ACT, 2021

Updated: Aug 10, 2021

Occupational pension funds have over the years grappled with the issue of unremitted pension contributions from employers who are facing financial challenges. This has led to underfunding of pension funds which are in turn unable to meet their obligations to members.

The Retirement Benefits Act, 1997 has been amended over time to provide for mechanisms to recover unremitted pension contributions from an employer. Section 53A and 53B of the Retirement Benefits Act, 1997 were introduced enable pension funds and the Retirement Benefits Authority (“RBA”) respectively to institute proceedings for the recovery of unremitted pension contributions from employers.

However, there has been little success. The foregoing mechanisms have now been reinforced by the introduction of Section 53B(2)-(8) as a last resort measure available for both the pension funds and RBA.

Changes to the Retirement Benefits Act

Section 53B(2)-(8) empower pension funds to appoint Kenya Revenue Authority (“KRA”) as an agent to collect the unremitted pension contributions from defaulting employers. For a pension fund to appoint KRA as an agent, it needs to seek the approval of RBA and satisfy RBA that it has taken all reasonable effort to recover the unremitted pension contributions without success. RBA is required to approve the appointment of KRA as an agent within Twenty One (21) days from the date of the request. The capping of time within which RBA should respond to an application is necessary so as to bring certainty to how these applications will be treated. It is worth noting that Section 53B(4) does not compel RBA to give reasons for rejecting an application.

Where RBA determines on its own motion that the trustees of a pension fund have failed to recover the amounts due from the employer, it can instruct the trustees to appoint KRA as an agent. Section 53B(5) does not provide the period within which the trustees are required to appoint KRA as an agent.

Powers of KRA as an Agent

Once appointed as an agent, KRA will issue a Twenty One (21) day notice to the employer requiring the employer to make good on its obligations and pay such interest, penalties and recovery costs as will be applicable. If the employer does not comply with the notice, KRA will serve a agency notice on the employer and the employers banks. The effect of the agency notice is that it attaches the bank accounts of the defaulting employer and all money in such accounts will be remitted to the scheme within Thirty (30) days of the agency notice.


The introduction of section 53B(2)-(8) will offer the much needed practicality in recovery of unremitted pension contributions by employers.

As at the date of this publication, RBA is yet to issue guidelines to pension schemes on the form of the application for appointment of KRA as an agent.

Recovery of unremitted Pension contributions by Pension funds – Key changes under Finance
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Gregory O Manyala

Patricia A Magor


This legal alert is prepared for informational purposes only and does not constitute legal or other advice. You should therefore not take, or refrain from taking action based on its contents. This legal alert is also not intended to create, and receipt of it does not constitute, an advocate-client relationship.

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