The Auditor General, Nancy Gathungu, has revealed substantial financial irregularities at Nairobi University’s Pension Scheme, highlighting significant losses attributed to the management’s decision to classify millions of shillings as bad debts.
The Nairobi University Pension Scheme, established under an irrevocable Trust Deed in June 2007, is a defined contribution scheme designed to provide retirement benefits to the University of Nairobi’s permanent and pensionable staff. Governance of the scheme falls under the Board of Trustees, tasked with ensuring its administration aligns with the best interests of its members.
The audit report identifies mounting rent arrears amounting to hundreds of millions, including Kshs. 111,307,000 for Ambank House and Kshs. 4,975,000 for Unipen Apartments. Of these amounts, Kshs. 87,875,397 and Kshs. 2,960,939, respectively, have remained outstanding for over 120 days, casting doubt on the accuracy and recoverability of total receivables amounting to Kshs. 194,754,000.
In August 2022, the Trustees categorized Kshs. 21,604,000 and Kshs. 1,182,000 in rent arrears as bad debts for Ambank House and Unipen Apartments, despite lacking a formal policy to support this decision. Additionally, deposits held in Imperial Bank, Kenya Finance Bank, and Chase Bank, amounting to Kshs. 30,835,000, Kshs. 43,412,000, and Kshs. 15,000,000, respectively, have been fully written off as bad debts, resulting in a zero balance as of June 30, 2024.
Further compounding the challenges, the Scheme has failed to secure indemnity insurance for its managers and trustees, exposing the Trust Fund to financial risks linked to management decisions.
The report also uncovers long-standing unremitted pension contributions totalling Kshs. 7,223,501,000 owed by the Scheme sponsor, the University of Nairobi, dating back to November 2016. Despite the University Council’s 2019 remedial plan approved by the Retirement Benefits Authority (RBA), which stipulated monthly repayments of Kshs. 50 million to clear arrears by September 2025, the University failed to adhere to the plan. A subsequent request to halt payments during the Covid-19 pandemic resulted in no revised plan being provided. As of September 2024, no payments had been made to settle the overdue contributions.
The audit findings expose significant governance lapses, financial mismanagement, and unfulfilled obligations, raising serious concerns about the long-term viability of the Nairobi University Pension Scheme and the protection of its members’ retirement benefits.
