Treasury Cabinet Secretary John Mbadi has sounded the alarm over the rising pension debt in counties, warning that it has ballooned to Sh103 billion and poses a major risk to the welfare of public servants.

He urged county governments to adopt full compliance with public finance reforms, embrace e-procurement, and strengthen accountability to safeguard the gains of devolution.

Speaking during the devolution conference in Homa Bay, Mbadi said the arrears had risen sharply from Sh23.3 billion in recent years to over Sh103 billion, describing the situation as deeply worrying.

He condemned the practice of county administrations withholding pension contributions from workers.

"This is criminal. If you are supposed to pay a salary to a staff member, and part of that salary is supposed to go to a pension, there is no rationality in paying half the salary and keeping the rest. It is not fair. It is unjust," Mbadi said. "Money belongs to people who will one day retire, and when they retire, they want to go home with something."

The CS called for urgent steps by both county and national governments to verify and clear pension arrears, insisting that deductions must be remitted in full and on time.

He emphasised that proper financial management was critical to sustaining the progress made under devolution.

While noting that devolution had transformed lives by expanding access to healthcare, education, infrastructure, and economic opportunities, Mbadi warned that these achievements could be reversed if fiscal discipline was not enforced. He stressed the need for counties to adopt tariff and rating policies and implement the national framework on enhancing county revenue.

He also criticised Parliament for delays in enacting the County Government Additional Allocation Bill, saying the repeated setbacks had led to late disbursement of funds, disrupted services, and low absorption of resources.
“Delays have also led to fiscal inefficiencies, resulting in additional costs in the form of commitment fees and foreign exchange charges,” he said.

Mbadi further urged counties to migrate to the Treasury Single Account (TSA) by 2026 to improve cash management. He underlined that transparency and accountability should be at the heart of all public finance operations.

Concluding his address, Mbadi stated that when well managed, public finances serve as an engine for economic growth and a guarantee of dignity for public servants.

He called for a renewed culture of discipline and accountability to sustain devolution and protect the social security of workers.