Recent details have emerged regarding significant investment missteps by the management of the National Social Security Fund (NSSF), resulting in substantial losses for pensioners. A new audit report indicates that the fund has lost nearly Sh1 billion due to poor investment decisions.
The majority of these losses stem from investments in the stock market and failed housing projects. Auditor General Nancy Gathungu has scrutinized NSSF managers for maintaining investments in struggling companies.
As a government agency, NSSF is tasked with collecting, safeguarding, and responsibly investing employees’ contributions for distribution upon retirement. However, it has been plagued by scandals over the years.
The audit revealed that NSSF acquired a substantial stake in Consolidated Bank of Kenya, purchasing shares worth Sh247 million. Unfortunately, the value of these shares plummeted by Sh209 million during the review period, dropping from Sh247 million to just Sh38 million by June 30, 2023.
Additionally, shares held in East Africa Portland Cement, Sameer Africa, and Athi River Mining also decreased in value by Sh50 million, with total investments dropping from Sh221 million in June 2022 to Sh170 million. Notably, none of these firms have paid dividends to NSSF.
Gathungu expressed concern over NSSF’s inaction regarding non-performing investments, emphasizing that fund managers are expected to have full control and authority to maximize returns.
The auditors also criticized the fund for failing to recover a Sh215 million advance payment to a contractor for a stalled housing project in Embakasi, which has not progressed due to a lack of necessary approvals from the Nairobi City County government. The failure to recover this advance payment constitutes a breach of legal obligations.
The audit further highlighted that NSSF failed to disclose member contributions totaling Sh9.54 billion, which includes mandatory contributions of Sh1.9 billion and penalties of Sh7.6 billion. These amounts were absent from the statements of net assets available for benefits as of June 30, 2023, rendering the reported contributions balance of Sh26.8 billion inaccurate.
Moreover, the fund has not posted contributions amounting to Sh942 million to individual members’ accounts. The auditors noted a lack of integration between employer bank accounts and the fund’s collection system, causing delays in updating member accounts.
The report also raised concerns about a parcel of land in Kisumu, where unauthorized activities have taken place without formal agreements. This situation has hindered the fund’s revenue generation from the property.
Additionally, Sh31 million spent on the construction of SSH Gym Centre and Bulk Filers is in question, as no status report on these projects was provided for audit verification.
Irregularities were noted in a Sh12.5 million payment to a travel service provider made after the expiration of the contract. Furthermore, the potential recovery of Sh904 million paid to the Kenya Revenue Authority in 1997 remains uncertain, as KRA has yet to acknowledge the tax refund due.
