The Technical University of Kenya (TUK) has attributed its nearly Sh13 billion in unpaid statutory deductions, pension contributions, and other liabilities to years of underfunding and persistent cash flow challenges.
The university told the Senate Labor Committee it had to prioritize paying employees’ net salaries over statutory deductions like pension contributions due to funding shortfalls.
As at January 31, 2025, the Technical University of Kenya had pending bills amounting to Sh12.99 billion, a report tabled before the committee during discussions on winding up and liquidation of the TUK Staff Retirement Benefit Scheme revealed.
The majority of the debt comprised statutory deductions totaling Sh6.71 billion, of which pension funds were owed Sh4.39 billion.
The university also reported Sh761.1 million in Collective Bargaining Agreement (CBA) arrears, Sh398.8 million in staff claims, and Sh360.1 million owed to contractors and other creditors.
Other outstanding liabilities included Sh305.9 million in bank, SACCO, and insurance deductions and Sh70.3 million in third-party funds.
TUK said its financial problems started during its conversion from the Kenya Polytechnic, when it took over unfunded obligations which kept growing between 2009 and 2025.
“Because of the cash flow challenges, the University resorted to paying net salaries to all staff and became unable to remit statutory deductions, including pensions.”
The university cited several factors contributing to the financial strain, including government funding that fell short of its payroll requirements, limited ability to generate additional revenue, and rising statutory and third-party obligations.
It also said the growing number of government-sponsored students was not matched by additional funding, and that the reinstatement of TVET diploma programmes in 2015 created a further Sh979 million funding gap.
TUK also disclosed that about Sh39 million collected as pension contributions between 2009 and 2013, before the retirement benefits scheme was formally registered, was deposited in a savings account but was not transferred to the pension scheme.
The university said its records indicate that the money was instead used for other university operations on the direction of the then Vice-Chancellor.
TUK said it has since reconciled its pension records and found that the outstanding amounts were largely linked to the funding constraints that have affected the institution over the years.
To address the problem, the government adopted a recovery plan under the March 17, 2025 Return-to-Work Formula, including a Sh500 million allocation for pension arrears in the 2025/26 financial year.
The plan provides for phased funding to clear the outstanding pension obligations, with full pension remittances expected to resume from July 2025 and further allocations running through the 2028/29 financial year.
However, TUK said implementation of the recovery plan depends on additional funding from the National Treasury and Parliament.
It said requests for additional funding under the second Supplementary Budget for the 2025/26 financial year were not fully met.
The university warned that continued delays in funding could affect payroll stability, staff welfare and industrial relations.
