How Poor NSSF Investments Depleted Pensioners’ Savings – Audit
The management of the National Social Security Fund (NSSF) has made several investment errors that have led to significant financial losses for pensioners.
An audit report reveals that the fund has lost nearly Sh1 billion due to these investments.
Most of the lost funds were invested in the stock market and failed housing projects. Auditor General Nancy Gathungu has criticized NSSF managers for continuing to invest in struggling companies.
NSSF, a government agency responsible for collecting and investing employee contributions, has faced numerous scandals over the years.
In the audit, it was found that NSSF invested Sh247 million in Consolidated Bank of Kenya shares, which later dropped in value by Sh209 million.
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By June 30, 2023, the shares had plummeted from Sh247 million to Sh38 million. Additionally, investments in East Africa Portland Cement, Sameer Africa, and Athi River Mining fell by Sh50 million, from Sh221 million in June 2022 to Sh170 million.
These firms did not pay any dividends to NSSF, questioning the value and fair evaluation of these investments.
Unrecovered Payments and Failed Projects
NSSF managers also failed to recover a Sh215 million advance payment to a contractor for the stalled Embakasi housing project.
The project halted due to lack of approval from the Nairobi City county government. As of February 2024, the advance payment had not been recovered, breaching the law by failing to recover members’ contributions.
The audit highlighted NSSF’s failure to disclose member contributions amounting to Sh9.54 billion, including Sh1.9 billion in mandatory contributions and Sh7.6 billion in penalties.
These amounts were not reflected in the net assets available for benefits as of June 30, 2023, rendering the stated balance of Sh26.8 billion inaccurate and incomplete.
Furthermore, contributions totaling Sh942 million had not been posted to respective members’ accounts, due to lack of integration between the employer’s bank accounts and the fund’s collection system, resulting in delays in updating members’ accounts.
Risk to Key Assets
Pensioners risk losing significant assets, such as a parcel of land in Kisumu, where an individual has opened a garage without a formal agreement with NSSF.
The lack of a lease or tenancy agreement and inconsistent rent payments have denied the fund optimal revenue from the property.
NSSF’s expenditure of Sh31 million on the construction of SSH Gym Centre and Bulk filers was flagged, as the completion status report was not provided for audit.
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The fund also spent Sh12.5 million on a travel service provider after the contract had expired in April 2023, raising concerns about the validity of these payments.
Additionally, NSSF may not recover Sh904 million paid to Kenya Revenue Authority in 1997, which has yet to acknowledge the tax refund due.
How Poor NSSF Investments Depleted Pensioners’ Savings – Audit
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