Cash-strapped TUK given 30 days to pay Sh6.4bn pension debt

The Technical University of Kenya (TUK) faces a financial crisis as it has been given 30 days to pay a Sh6.43 billion debt owed to its current and former employees in unpaid pension contributions and accumulated interest. Lawyers representing the staff retirement benefits scheme have threatened legal action if the university fails to settle the debt by December 7, 2026. The claim comprises Sh3.04 billion in unpaid contributions and Sh3.39 billion in interest.

The pension scheme, with over 1,850 members, is currently under liquidation. The lawyers, Long’et & Mumo LLP, sent a demand letter to the Vice-Chancellor on November 6, citing a trust deed and rules dated May 2013, which governed the relationship between the university, the pension scheme, and its members. The university was to contribute 20 per cent of pensionable salaries, while staff contributed 10 per cent, and the university was to collect and remit both amounts.

The demand letter warns that failure to pay the debt within 30 days will trigger proceedings to recover the debt, further interest, and legal costs. The accompanying schedule traces arrears to July 2010, recording Sh3.48 billion in contributions and Sh441.5 million in payments, leaving principal arrears of Sh3 billion. Interest was compounded monthly using annualised 91-day Treasury bill rates.

The pension scheme entered statutory administration in November 2015, and the High Court ordered its liquidation in July 2024. A Senate report found that the scheme had receivables of Sh6.83 billion as at April 2026, against available assets of Sh907 million. The report identified about 1,850 affected members, including 1,299 serving employees and 551 deferred members.

The Senate committee said available funds could initially meet only about 13 per cent of members’ accumulated benefits. A member entitled to Sh1 million could receive about Sh130,000. In a September 17 update, the university said the liquidator had announced Sh906.6 million was available for distribution. Members were to receive 12.38 per cent of their benefits in two tranches.

The university told senators that underfunding and cash-flow problems had affected its ability to meet financial obligations. It reported pending bills of Sh12.99 billion as at January 31, 2025, saying funding shortfalls forced it to prioritise net salaries over statutory deductions. However, the Senate said financial difficulties did not justify retaining money deducted for workers' retirement.

TUK Vice-Chancellor said in September that the university wanted a new pension scheme and had petitioned the Education Ministry and Treasury over commitments in a 2024 return-to-work agreement. The liquidator told members that recovering the Sh6.4 billion was a key next step. The university faces a significant financial crisis, with Sh12 billion in pending bills and now a looming pension debt deadline.

Key points

• The Technical University of Kenya must pay Sh6.43 billion in unpaid pension contributions and accumulated interest to its current and former employees within 30 days.