MPs are now demanding answers from the National Social Security Fund (NSSF) over suspicious irregular bond deals with about six companies.
The National Assembly Committee on Finance and Planning is expected to present a report to the House in the first week of February on the irregular bond dealings between the fund and asset managers.
Garissa Woman Representative Siyad Amina Udgoon raised the matter. She wants the committee chaired by Molo MP Kimani Kuria to summon all parties involved in the matter, including the NSSF fund manager, to shed light on the matter.
The Central Bank of Kenya (CBK) had asked the Capital Markets Authority (CMA) to investigate certain bond trades under the NSSF between some brokers and market players.
The suspicious transactions occurred between May and July 2024. A fund manager was accused of buying bonds for NSSF at prices higher than the market average and in some cases selling the securities at lower prices and buying the same at higher prices in a few days.
The trades are suspected to be designed to generate illegal profits for the participants.
The NSSF outsources the management of most of its assets to various fund managers and invests the rest internally.
Ms Udgoon wants the committee to press NSSF to make a full disclosure of the more than Sh6 billion pension fund it manages on behalf of pensioners and traders. The Finance Committee is expected to unearth answers to at least five questions, to which MPs expect a full response next month.
The lawmakers want full report on the NSSF’s distribution of funds to the six external managers from July 2022 to October 2024, including all bond transactions made in the primary and secondary markets during that period.
As part of its investigations, the Finance Committee is also expected to provide the National Assembly with a report on the total value of investments made in the purchase of government securities such as Treasury bills and the distribution among the six external fund managers.
The lawmakers also want to know what steps the NSFF board of trustees has taken to internally investigate the alleged irregular trading activities and to ensure that prudential principles such as security, profitability, liquidity and transparency were followed in the investment of the funds.
In addition, the MPs want a report on any investigations that the CMA in collaboration with the CBK has conducted or is conducting into the alleged irregular trading activities and, if so, the action taken to sanction those involved.
NSSF now collects an average of Sh6.5 billion a month, up from the Sh1.4 billion it used to net previously when the statutory contributions were lower. The higher deductions were introduced in 2023 and have been rising steadily, with the next increase set to be implemented this month.
