- The National Social Security Fund (NSSF) was holding the cash in a suspense account as at June 2015.
- The act is in breach of Kenya’s pension rules requiring all schemes to maintain proper records identifying the worker and amount contributed.
The National Social Security Fund (NSSF) is holding Sh748 million from unidentified contributors, putting a section of workers at risk of missing out on pension pay upon retirement.
The State-run pension scheme was holding the cash in a suspense account as at June 2015, which is in breach of Kenya’s pension rules requiring all schemes to maintain proper records identifying the worker and amount contributed.
“The management should liaise with the respective employers to eliminate and prevent further accumulation of the suspense balance,” said Auditor-General Edward Ouko who issued a qualified opinion on NSSF’s latest books of accounts.
A qualified opinion means there are gaps in book-keeping, hence not providing a true picture of the scheme.
The revised NSSF Act came into force in January 2014 and subjects the public scheme to rules stipulated by the Retirement Benefits Act and the industry regulator.
“A scheme shall cause to be kept records of the account of every member and all transactions in respect of each member shall be duly recorded,” reads Rule 28(2) of the Retirement Benefit Schemes regulations. The mountain of cash comes on top of the Auditor General flagging NSSF for wasteful spending amounting to 3.73 per cent of total assets hence breaching the legal two per cent ceiling.
NSSF’s bulging waistline saw returns to pensioners shrink to an all-time low of 3.0 per cent last year from 12.5 per cent of 2014.
Retirement Benefits Authority chief executive Edward Odundo has ordered NSSF to reconcile its records and avert possible plunder of the cash whose owners remain mysterious.
“We’ve put our foot down. They must look for these people and bring the amount to zero,” said Dr Odundo.
The regulator reckons some of the ghost contributors are casuals or those who temporarily lost their jobs or lack permanent addresses hence their accounts are not updated.
NSSF acting managing trustee Anthony Omerikwa blamed the suspense account on employers who fail to make monthly returns, or make erroneous submissions in terms of names and member number.
“These funds are kept in this suspense account and are accessible to the contributors once their employers/sponsors avail the records,” Mr Omerikwa said in a statement.
He added that the public scheme is banking on technology to eliminate the existence of any funds from unknown workers.
“We have enhanced member registration process whereby member numbers are now auto-generated by the fund’s social security and pension administration system e-platform hence eliminating non-capturing of member numbers in the system,” said Omerikwa.
The volume of cash from faceless contributors to NSSF topped Sh6.5 billion in the period to June 2010 and dropped to Sh5.9 billion as at June 2012.
NSSF’s suspense account held Sh2.4 billion in June 2014, indicating a massive drop to the Sh748 million as at June 2015, the latest financials released.
The new NSSF law converted the hitherto provident fund into a pension scheme and raised monthly fees equally met by workers and employers to a high of Sh18,450 from the current Sh400. The new rates are yet to take effect due to a court case.