Margaret Nyakang’o, Kenya’s Controller of Budget, told the Departmental Committee on Finance and National Planning that the draft County Governments Retirement Scheme Bill, 2026, could increase county expenditures by about Sh35 billion each year.

She noted that counties already spent Sh235.96 billion on employee compensation in the 2025/26 fiscal year, representing roughly 42 % of their revenue, well above the statutory 35 % ceiling.

Nyakang’o warned that counties also carry Sh100.24 billion in outstanding salary arrears and statutory deductions as of 30 June 2026, which could be transferred into the new scheme without proper valuation.

She called for an independent audit of existing liabilities before any transfer to the proposed retirement fund, stressing that a “money Bill of this magnitude must state its costed fiscal impact.”

The Controller also urged personal accountability for accounting officers who deliberately fail to remit statutory deductions, arguing that penalties on counties ultimately burden residents.

Committee members, including Molo MP Kuria Kimani and Turkana South MP John Ariko, raised concerns about unpaid deductions and the need for reasonable penalties and stronger controls over statutory remittances.

In response, Nyakang’o explained that linking the Human Resource System with the Integrated Financial Management Information System (IFMIS) is intended to ensure salary payments trigger statutory deductions, though the integration has not yet cleared historic arrears.

The Council of Governors and the Local Authorities Provident Fund urged that the new scheme succeed LAPFUND legally, preserving its assets, liabilities and existing employment arrangements.

County governors representing the Council of Governors proposed a 31 % gratuity for certain county officials, while the County Assemblies Forum called for consolidation of LAPFUND, LAPTRUST and the County Pension Fund and protection of current benefits for MCAs.

The Retirement Benefits Authority suggested limiting the Board of Trustees to nine members, appointing an independent chair, and removing a clause that restricts retirees’ choice of annuity providers.

The Salaries and Remuneration Commission recommended defining pensionable emoluments as basic salary only and urged Parliament to combine bills covering county employees’ retirement benefits.

Overall, the draft legislation aims to create a defined‑contribution retirement scheme for eligible county employees and state officers, with detailed provisions for governance, financial management and the transfer of existing funds.