Payment to Kenyan retirees and their beneficiaries totaling over Sh266Million was returned to the National Social Securities Fund (NSSF) in the financial year ended June 2021, raising audit queries
In her report of the fund’s financial performance for the year in review, Auditor General Nancy Gathungu flagged those concerns whose explanation she said was not provided for failure to clear the long outstanding returned benefits for the years dating back to 2012.
According to the audit report, the accuracy of net assets available for benefits worth over Sh1.4 Billion could also not be appropriately established.
“The long outstanding deposits are receivables but are incorrectly included in the payables balance…in the circumstances, the accuracy, completeness and fair statement of the payables and accruals balance totaling Sh1,431,691,147 as at June 2021 could not be confirmed,” reads in part Gathungu’s report
Further, the report found that the fund deliberately failed to record by omission of over Sh16million it had invested but earned income interest from corporate bonds. NSSF largely makes handsome returns by investing in government securities, corporate bonds, equities, properties and other long-term asset vehicles besides deposits.
The latest revelations by the state’s auditor comes amid concerns that over 10 million Kenyans are sleepwalking into a retirement crisis as they fall short of adequate savings once they leave work.
Statistics show that less than 10 per cent of Kenyan population retire financially independent.
One of those reasons being cited for the disturbing state is that, when saving for retirement, most people underestimate how much they will have to pay for medical expenses during their retirement years.
What’s worse, NSSF offices have become synonymous with long queues of beneficiaries continually seeking their benefits with never-ending follow-ups, despite recording a relatively improved performance in net earnings for the year just ended.
The net increased Scheme’s income grew by over Sh 35 Billion in the year ended June 2021 compared to Sh14 Billion it announced in a similar period a year earlier.
The decline in contribution and benefits was attributed to COVID-19 lockdown which affected businesses and movement in the fourth quarter. A net increase in scheme funds of Sh14.5billion was achieved in 2020.
Last year, however, saw member contributions nearly triple owing to the lifting of all movement restrictions that had been put in place to curb the spread of Covid-19.
Member contribution declined by 2.4 percent from Sh15.10B in 2019 to Sh14.733 billion in 2020, while benefits paid to members lessened by 10.2 percent from Sh4.94 paid in 2019 to Sh4.43 billion paid in 2020.
In an attempt to increase member contributions to the fund through the controversial National Social Security Fund (NSSF) Act of 2013 which had sought to increase workers monthly deductions was is September declared unconstitutional by Employment and Labor Relations Court – in a judgement that declared the section of the law illegal and unconstitutional over Parliament failure to refer the bill to Senate prior to the enactment.
The decision by the court followed a suit by Kenya County Government Workers Union which sued the NSSF Board, former Labor Cabinet Secretary Kazungu Kambi, Retirement Benefits Authority and Competition Authority claiming that the increased rate as stipulated in the NSSF Act 2013 negatively affects pensioners.
The County workers union had argued that the pensioners faced the risk of being forced to join two parallel social security schemes or leave their current schemes to other inferior ones, if the rates were allowed to prevail.
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