Principal Secretary for Higher Education Dr Beatrice Muganda and University Fund CEO Geoffrey Monari following proceedings during the Second Biennial Conference on Funding Higher Education in Naivasha on February 26, 2025.
Lecturers and university staff risk retiring in poverty as employers withhold their pension contributions now totalling Sh25.9 billion.
Records from the Universities Fund show that unremitted employer pension contributions are the largest pending bills for universities, surpassing Pay As You Earn (PAYE) arrears and debts owed to suppliers and contractors.
The revelations emerged during a two-day conference in Naivasha, Nakuru County that brings together university leaders, policymakers and private sector partners to discuss alternative funding models.
The data from the Universities Fund further shows that total university debts stand at Sh72.2 billion as of 2025.
However, universities are yet to remit Sh25.9 billion deducted from staff salaries over the years as pension and over Sh20 billion for PAYE. Other unremitted deductions include Sacco contributions amounting to Sh3.3 billion, unpaid supplier debts of Sh3.1 billion, and Sh5.1 billion for stalled capital projects.
This situation leaves thousands of university employees staring at a bleak future as they approach retirement. The pension crisis is now a major social security concern for employees who may leave service without financial security.
Universities Fund CEO Geoffrey Monari expressed concern over the crisis saying that unremitted pension arrears mean lecturers who retire in the coming years will have nothing to fall back on.
“The pension crisis now poses a huge challenge for employees who may retire without their benefits. Imagine working for thirty or forty years only to leave empty-handed because your pension was never remitted. It is a sad and dire situation,” Mr Monari said.
Although university debts have dropped from Sh75 billion to Sh72.2 billion in the last two years, there are growing fears that the figures could rise again following a recent court ruling suspending the new university funding model.
According to Mr Monari, the new model had helped reduce university debts by Sh3 billion before the courts declared it unconstitutional.
“There are fears that the debts which have crippled universities could rise again as institutions grapple with the court's directives. In the last two years, university debts dropped from Sh75 billion to Sh72 billion after the introduction of the new funding model,” he said.
Mr Monari was speaking to the press during the two-day Biennial Universities Funding Conference in Naivasha.
The High Court on Monday declined to issue orders to stay a judgment that stopped implementation of the new university funding model.
The judgment, delivered by Justice Chacha Mwita on December 20 2024, ruled the model unconstitutional and stopped its rollout.
Public universities have been struggling with huge pending bills, which stood at Sh75 billion two years ago. The debts accumulated over six years due to insufficient funding from the government.
Records show that in just one year, universities accrued more than Sh8 billion in new debts.
Last year, the Ministry of Education announced plans to audit and clear the billions of shillings owed to the Kenya Revenue Authority (KRA). The ministry had indicated that pending bills were under review, with a strategy to settle them gradually.
Previously, PAYE arrears stood at about Sh20 billion, pension at Sh24.6 billion, and unpaid suppliers at around Sh10 billion. However, the latest data shows that unremitted pension arrears have now increased by over Sh1 billion.
Vice-chancellors of public universities have consistently raised concerns over financial struggles affecting the institutions. They revealed that accumulated debts for staff pensions, statutory deductions, and tax obligations had exceeded Sh60 billion, with the figure rising due to accrued interest.
By 2023, Egerton University’s debt burden had ballooned to Sh9 billion as the institution struggled to meet its operational costs. The debt, which included pending bills, stood at Sh6 billion in 2019 but escalated due to financial difficulties during the COVID-19 pandemic.
Management of the Njoro-based campus led by vice-chancellor Prof Isaac Ongubo Kibwage made efforts to stabilise the situation, but the challenges persisted.
To keep the institution afloat, the university reduced lecturers’ and staff salaries by 40 per cent between 2020 and 2023. However, a 100 per cent salary payment was reinstated later.
Moi University, Kenyatta University, the University of Nairobi and Jomo Kenyatta University of Agriculture and Technology (JKUAT) are among the institutions that have faced financial difficulties.
The increasing debts have exacerbated an already dire situation, making it difficult for universities to pay KRA, settle PAYE obligations, and remit workers’ pension contributions.
Over the years, some universities have shut down campuses and defaulted on statutory obligations and payments to contractors.
In the 2022 - 23 financial year, the National Treasury allocated Sh80 billion for higher education despite universities requesting Sh180 billion to meet their budgetary needs. In the 2023 - 24 financial year, the allocation increased to Sh82 billion under the new model.
Stakeholders at the conference called for urgent interventions to address the financial crisis in universities and ensure that pension contributions and other statutory obligations are met.
They warned that without a sustainable funding model, universities will continue struggling with financial instability, which could impact education quality and staff welfare.
