Treasury to roll out digital pension portal amid widening scam reports

A major pension fraud ring is targeting retirees' bank accounts, prompting senators to demand answers as Treasury pledged to roll out a fully automated pension system by July 1, 2025.

Appearing before the Senate plenary, Treasury Cabinet Secretary John Mbadi confirmed that fraud cases involving collusion between pension staff and banking officials had been detected.

“We have identified cases where pensioners have been defrauded due to collusion between pension staff and banking officials,” he said.

Migori Senator Eddy Oketch said the fraudsters have managed to access retirees’ bank information and steal lump sum pension deposits shortly after disbursement.

“I am seeking a statement from the Senate Finance and Budget Committee regarding a number of fraud cases involving Absa Bank accounts since 2022, as well as the status of investigations into those cases,” Oketch said.

He highlighted a recent case in which a retired teacher lost Sh2.4 million after her pension hit her account.

Mbadi said the Treasury is working with financial institutions to monitor dormant pension accounts and stop suspicious withdrawals.

“We are working with commercial banks and financial institutions to monitor dormant pension accounts, flag suspicious activity, and prevent unauthorized withdrawals,” he said.

He also addressed the delays in processing retirement claims, admitting that inefficiencies in ministries, late notifications, and incomplete documentation were partly to blame.

“I agree there have been challenges. When pensioners leave employment, they often wait too long to receive their benefits, partly due to systemic inefficiencies. However, there are additional issues contributing to the delays,” he explained.

The CS denied any diversion of pension funds, saying the allocations are ring-fenced and treated as a first charge in the national budget.

“I am not aware of any instance where pension allocations have been re-allocated. In fact, pension funds are among the most securely ring-fenced allocations,” he said.

To improve pension management, the Treasury has hired a contractor to develop an end-to-end Enterprise Resource Planning system, which will fully digitise claims, automate approvals, and integrate with other government databases.

“We are trying to ensure the management of pensions is automated by putting in place a self-service portal, where the pensioners don't have to move anywhere. Even at the comfort of their homes they can access almost all the services they need; file documents and start withdrawing money to their phones from their banks,” Mbadi told Senators.

He said the system will also include biometric verification to detect ghost beneficiaries and stop payments to deceased pensioners.

“We are alive to the fact that some pensioners who are no longer alive continue to receive payments. Through biometric pension verification and the e-pension system, we are working to stop this,” he said.

The CS disclosed that 18 pension officers had been seconded to key agencies like the Teachers Service Commission to speed up verification.

He said employers are now required to issue retirement notices a year in advance and submit claims nine months before retirement.

Mbadi noted that between April 30 and May 21, Treasury paid out Sh17.4 billion in claims and had brought down the pending balance from Sh23 billion last year to Sh16.9 billion.

“I think we are going to do much better than last year, although we should do 100%,” said the CS.

The CS said Huduma centres will also support pensioners across the country in accessing digital services.

“We are having a self-service portal… even at the comfort of their homes, they can access almost all the services that they need… and we have also put in place services at Huduma centers to support this," Mbadi explained.