For decades, Kenya’s public pension and health insurance systems have promised workers security in retirement and protection during illness.
But for many citizens, these promises have now turned into frustration and betrayal as the money they faithfully contributed has ended up in the pockets of fraudsters within the system.
In 2024, a report by Auditor General Nancy Gathungu revealed more than 260,000 cases of fraudulent activities targeting pension schemes in Kenya.
Between 2013 and 2020, over 67 billion Kenyan shillings ($515 million, €442 million) were lost through fake pension scheme payments.
Meanwhile, legitimate retirees have been left empty-handed, and older people are passing away while still waiting to receive the pensions they worked so hard for.
One person DW spoke with declined to be quoted for this story, fearing that speaking out would doom any remaining chance of ever receiving what their family is still owed.
John Wachira, the secretary general of the Kenya Association of Retired Officers, however, does speak out.
“When you join the pension scheme, you’re promised that when you retire, you will get your pension. And it will be regularly reviewed, so that if salaries are increased, your pension will also be reviewed. But that does not happen,” he told DW.
Instead of enjoying the fruits of their labor, retired Kenyans are still facing chronic delays, requests for bribes and opaque processes that leave them feeling powerless.
Public deductions, private burdens
Payments to the country’s pension and health insurance schemes are mandatory for Kenyans; you cannot opt out. Pension contributions are made through the National Social Security Fund (NSSF), and health insurance is provided via the Social Health Insurance Fund (SHIF).
However, many Kenyans feel forced to pay for private insurance on top of the public insurance to ensure they receive the care they need when required. But this option is mostly limited to the middle and upper classes, as many Kenyans can’t afford to pay twice.
Wachira argues people expect a pension to ensure that “when you leave the service, you maintain a certain standard” — the same standard, he said, when you are in service, and which shouldn’t “drop down because of inflation.”
If contributions are mandatory and consistent, but payouts aren’t, where does the money go?
How pension frauds drained funds
The 2024 Auditor General’s report painted senior officials managing the pension scheme as fraudsters who colluded within the National Treasury to steal from the fund through nonexistent persons and double payments to duplicate accounts.
Around 15,000 people benefited from fraudulent pension payments totaling over $15 million, according to the report.
Some of these payments went to individuals who started receiving pension payments even before they had officially retired. Some received payouts despite not following the right procedures. Others were given a payout without being registered at all, as they were only added to the system later to cover their tracks in case they were audited.
The report also highlighted issues with delays, bureaucracy and systemic data weaknesses, like a lack of proper identification and missing records.
Auditors found serious systemic loopholes in the pension scheme, with irregularities found in nearly all major ministries, including those for foreign affairs, social protection and the judiciary.
For those who do end up receiving their pensions, they claim that the pay does not reflect the inflation situation in the country.
The scale of the problem is difficult to measure, as there are no concrete formal records of those affected, and most cases go unreported. But based on multiple accounts, the issue affects people across different segments of society from the lower to the middle class.
In a recent case that sparked nationwide anger, a retired teacher, Violet Akoth Nyatol, lost over 2,400,000 Kenyan shillings in pension payouts after corrupt pension officials colluded with bank staff to divert her benefits.
In Kenya, this would have been enough to buy a small plot of land in her hometown.
Health insurance funds also blundered
In what’s been another devastating blow to government credibility, Health Cabinet Secretary Aden Duale has recently admitted that the health insurance scheme was also the target of fraud.
On July 1, Duale announced that 35 hospitals across the country are accused of stealing over $804 million from the health tax fund to which Kenyans contribute.
Fraud and corruption within Kenya’s public health insurance system have been ongoing issues since the establishment of the National Hospital Insurance Fund (NHIF) in 1966, with various scandals over the decades highlighting systemic weaknesses and mismanagement.
In 2024, NHIF was replaced by the Social Health Authority (SHA), which aimed to introduce a more comprehensive health insurance system with multiple schemes to improve access and affordability.
But the new authority is already grappling with cases of corruption, fraud and mismanagement.
In a post on X in late August, Duale noted that the fraudulent claims to the SHA included “falsifying records, inflating and phantom billing, upcoding (when a provider bills for a more expensive procedure) and converting outpatient visits into costly inpatient claims.”
Geoffrey Mwaniki feels cheated after an experience at an Kenyan hospital.
He was admitted to Moi Referral Hospital in Eldoret on July 1 and was forced to cover his own bills out of pocket despite making monthly contributions to the SHA fund.
Speaking with DW, Mwaniki said that SHA denied him the code he needed to release the necessary funds, telling him that “the system was down,” which was why “the password to release the funds could not be generated.”
When the system came back on, he said, SHA acknowledged his request but argued they would “not be handling cases that had been submitted while the system was down.”
The problem was not “by coincidence, but it was by design,” said Mwaniki, suspecting the frequent breakdowns of the system were meant to “keep patients from accessing their money.”
“It really killed me, because I had to borrow some money to offset my bill so that I may be discharged from the hospital,” he said.
If he had a choice, he wouldn’t have SHA insurance, he added but unfortunately, “it is mandatory.”
Is digitalization a possible fix or another empty promise?
To end widespread delays and fraud targeting retirees, the Kenyan government promised to fully digitize the pension payment system from July 1, 2025.
Treasury Cabinet Secretary John Mbadi told Kenyan Senate lawmakers that the current manual system not only delays pension disbursements but also exposes retirees to sophisticated fraud schemes.
However, the public unrest that began earlier this year shows that many Kenyans have already lost confidence in the government’s policies, including in the social security systems that are mandatory to pay into to but don’t always pay out.
Edited by: Uwe Hessler
