TUK Kenya: Court Orders Payment of Unpaid Pension Contributions

• TUK has a debt of nearly Sh13 billion due to underfunding and cash flow challenges.
• The university prioritized payment of employees' net salaries while neglecting statutory deductions.
• TUK owes Sh12.99 billion in pending bills, including Sh6.71 billion in unpaid statutory deductions.
• The government has adopted a recovery plan to clear outstanding pension obligations.

The university's financial difficulties date back to its transition from the Kenya Polytechnic in 2009, when it inherited unfunded obligations that continued to accumulate over the years.

The Technical University of Kenya (TUK) has been grappling with a massive debt of nearly Sh13 billion, which it attributes to years of underfunding and persistent cash flow challenges. This financial strain has forced the university to prioritize payment of employees' net salaries while neglecting statutory deductions, including pension contributions. The university's financial difficulties date back to its transition from the Kenya Polytechnic in 2009, when it inherited unfunded obligations that continued to accumulate over the years. As a result, TUK resorted to paying net salary to all staff, making it unable to remit statutory deductions, including pensions.

TUK's financial woes are further exacerbated by unfunded obligations that have been accumulating since 2009. The university reported Sh12.99 billion in pending bills as of January 31, 2025, with unpaid statutory deductions accounting for the largest share at Sh6.71 billion. Additionally, TUK owes Sh4.39 billion to pension funds and has accumulated significant arrears in Collective Bargaining Agreement (CBA) payments, staff claims, and contractor fees. The university also disclosed that about Sh39 million collected as pension contributions between 2009 and 2013 was deposited in a savings account but not transferred to the pension scheme.

The government has acknowledged TUK's financial difficulties and adopted a recovery plan under the March 17, 2025 Return-to-Work Formula. The plan provides for phased funding to clear outstanding pension obligations and further allocations running through the 2028/29 financial year; however, full pension remittances, which were expected to resume from July 2025, have not yet fully materialized, with the pension scheme remaining significantly underfunded as of August 2026. However, TUK's implementation of the recovery plan depends on additional funding from the National Treasury and Parliament. Despite this, the university warned that continued delays in funding could affect payroll stability, staff welfare, and industrial relations.

Lawyers and compliance officers should watch for the potential impact on payroll stability, staff welfare, and industrial relations at universities in Kenya, as well as the implications of delayed pension remittances on employees' benefits.

Source: Original reporting via Capital FM