Thousands of workers who retire every year are perishing in absolute poverty while a few individuals at the now most corrupt agency in the country National Social Security Fund (NSSF) have looted enough to an extent that they cannot account for billions of shillings of workers’ monthly contributions.
The Auditor-General’s report on NSSF for the 2017/18 financial year, further casts doubt on the accuracy of Sh14 billion that is indicated as the balance of the members’ contributions as of June 30, 2018. The report revealed that NSSF’s books of accounts had Sh5.6 billion in what was classified as unremitted contributions because of its failure to enforce the legal provisions mandating it to ensure that employers deduct money from workers and remit it to the Fund on time. How does that even happen?
As of June 30, 2018, a review of member’s contributions status from 183 branches across five regions that are covered by the embattled NSSF shows that outstanding contributions and related penalties stood at Sh6.3 billion. Of this figure, Sh1.7 billion was in outstanding unremitted contributions while the balance of Sh4.5 billion was related to accumulated penalties.
In a report that was tabled in the National Assembly NSSF said that recovery efforts had borne fruit, but only Sh771 million had been collected by March 2019. This left the agency in a deficit of Sh5.6 billion.
“The recoverability of the unremitted members’ contributions accumulated over the years amounting to Sh5.6 billion remains doubtful,” says the report signed by retired Auditor-General Edward Ouko.
The law gives NSSF the power to impose fines on employers who fail to comply with any of its many provisions, including late remission of statutory contributions. While the agency had indicated that the balance of members’ contributions stood at Sh14 billion as of the end of the financial year, a review of collection records and related documents for the year under audit disclosed variances. The questions as to why the agency doesn’t deploy its maximum constitutional powers arise and also go unanswered.
For starters, lemme give you a figurative example, the monthly reports from the Software and Social Security Pension Administration System (SSPAS) indicate that monthly collections for the year stood at Sh14,016,684,188.61 billions while the figure in financial statements was Sh14,044,262,078 billions, translating into a difference of Sh27.5 million.
SSPAS also indicated that the NSSF global report on the contributions was Sh14,030,656,823.31, the one captured through the financial statements was Sh14,044,262,078, indicating a variance of Sh13.6 million.
On their response, NSSF management said that the variance between the global and monthly collection is because branch reports did not include M-Pesa payments, miscellaneous income, and payments receipted through reconciliations. However, the auditor rejects that half thought explanation that only dimwits can accept. The AG said that it is not clear why the receipts were not reflected in the branch reports since receipting under SSPAS is centralized.
“In any case, reconciliation between amounts in the global and branch reports was not presented for audit verification,” the report said.
Similarly, the contributions in transit, representing contributions that had not been posted to individual member accounts, declined by Sh99 million in the year under review from Sh762 million in the 2016/17 financial year to Sh663 million in the following year. The Retirement Benefits Act requires NSSF to maintain employer contributions, clearing accounts where total contributions are posted from the employers to the credit of members’ accounts for the settlements of benefits upon qualification.
The management of NSSF did not do this and the Auditor-General accused them of failing to reconcile and post the remaining balance of Sh663 million, which has accumulated over the years to the respective members’ accounts.
The Auditor-General’s report also warned Kenyans that the Fund was not clear on their Sh6 billion worth of assets the agency had put under construction. While the audit questioned NSSF for failing to collect Sh2.8 billion from buyers of its executive apartments at Milimani in Nairobi County, they also casted their doubt on whether the Hazina Towers, that used to house Kenya’s biggest Nakumatt supermarket, would be completed according to the new revised date of June 2019. The Chinese firm had won the contract worth of Sh4 billion.
The construction of Hazina Towers in Nairobi started in 2013 and was to be undertaken in 155 weeks with a completion date of July 2016. However, during the audit, the works were scaled down to 15 floors from the initial 34 floors, while the contract sum was reduced to Sh4 billion from Sh6.7 billion. The Chinese contractor for the apartments — Nanchang Foreign Engineering Company (Kenya) Ltd — completed the project at a cost of Sh1.6 billion and handed the houses to NSSF in April 2018.
NSSF has listed the sh1.6 billion Hazina Towers for sale and its board approved the sale of the house and it was expected that the agency would collect Sh3.6 billion, but even though it realized total sales, it received a paltry Sh753 million as of April 2019, the date of the handing over. So who collected the fund? Who valued the property? And who chewed the other millions?
NSSF has also invested in sh126million undeveloped land in Mavoko, Machakos, this has also put the pensioner’s funds in a cash twenty-two situation since the irregular disposal of the agency’s underdeveloped 70-acre piece of land goes undocumented. The land was subdivided into seven plots of 9.88 acres each and disposed of at Sh18 million each. The plots were sold to AMS Properties Ltd at a total cost of Sh126 million. However, only sh12.6 million was paid while the balance has never been paid to date.
