Introduction to Kenya’s Pension and Health Insurance Systems
For decades, the public pension and health insurance systems in Kenya have been promising the security of employees in retirement and protection during illness. However, for many citizens, these promises have transformed into frustration and betrayal when the money they contributed has ended up in the pockets of fraudsters within the system.
The Extent of Fraud in Pension Systems
In 2024, a report by the Auditor General showed more than 260,000 cases of fraudulent activities aimed at the Kenya pension systems. Between 2013 and 2020, over 67 billion Kenyan Shillings (approximately 515 million US dollars or 442 million euros) was lost due to fake pension payments. Legitimate pensioners were left empty-handed, and older people are still waiting to receive the pensions for which they have worked so hard.
Public Deductions, Private Burdens
Payments to the country’s pension and health insurance systems are mandatory for Kenyans. However, many Kenyans feel forced to pay for private insurance in addition to public insurance to ensure they receive the care they need if necessary. This option is mainly limited to the middle and upper class because many Kenyans cannot afford to pay twice.
Expectations vs. Reality
People expect a pension to ensure that "if they leave the service, they keep a certain standard" – the same standard they had when they were on duty, which should not fall due to inflation. If contributions are mandatory and consistent, but there are no payouts, where does the money go?
How Pension Fraud Drains the Funds
The Auditor General’s report in 2024 painted a picture of high-ranking civil servants who managed the pension program as fraudsters who worked together within the National Ministry of Finance to steal from the fund through non-existent persons and double payments. Around 15,000 people benefited from fraudulent pension payments totaling over 15 million dollars.
Problems with Delays, Bureaucracy, and Systemic Data Weaknesses
The report also emphasizes problems with delays, bureaucracy, and systemic data weaknesses, such as a lack of proper identification and lack of records. The auditors found serious systemic gaps in the pension system, whereby irregularities can be found in almost all major ministries.
Health Insurance Fund Also Affected
In a further devastating blow for the credibility of the government, the Minister of Health recently admitted that the health insurance system was also a target of fraud. The Minister announced that 35 hospitals are accused of siphoning over 804 million US dollars from the health tax fund to which Kenyans contributed nationwide.
Fraud and Corruption in Public Health Insurance
Fraud and corruption in public health insurance in Kenya have been ongoing problems since the founding of the National Hospital Insurance Fund (NHIF), with various scandals highlighting systemic weaknesses and mismanagement over the decades. The new Social Health Authority (SHA), aimed at introducing a more comprehensive health insurance system, is already marred by cases of corruption, fraud, and mismanagement.
Personal Experiences of Fraud and Inefficiency
A person who spoke to DW declined to be quoted, fearing that speaking out would jeopardize their remaining chance to ever get what their family is owed. However, John Wachira, the general secretary of the Kenya Association of Rental Officers, spoke out, saying, "If you join the pension scheme, you will be promised that when you retire, you will receive your pension. And it is regularly checked so that your pension is checked when the salaries are increased. However, this does not happen."
Is Digitization a Possible Solution or Another Empty Promise?
In order to end widespread delays and fraud against pensioners, the Kenyan government promised to digitize the pension payment system completely from July 1, 2025. However, the public unrest that started at the beginning of this year shows that many Kenyans have already lost confidence in the government’s policies, as well as in the social security systems they pay for but cannot always rely on.
