Feature: The Sh16 Billion Drain: How NSSF Squandered Retirees’ Savings

The National Social Security Fund (NSSF), is facing a crisis of staggering proportions. The latest financial report by the National Social Security Fund (NSSF) for the financial year ending June 2024 has exposed significant financial mismanagement, revealing that over Sh16 billion of Kenyans’ hard-earned retirement savings vanished through a litany of questionable practices, from phantom taxes to ill-advised investments and lavish expenditures. This isn’t just about numbers; it’s about the future of millions of Kenyans, whose golden years are now clouded by the shadows of alleged misconduct.

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One of the most glaring revelations in the Auditor General’s report is the inexplicable loss of Sh904 million in taxes, wrongly paid to the Kenya Revenue Authority (KRA). This significant sum, intended to cushion retirees, was “accidentally paid,” according to the NSSF. What’s worse, despite the Fund becoming tax-exempt, no progress has been made on securing a refund, nor has any interest been earned on these misdirected funds.

The trail of questionable decisions doesn’t end there. The report details a baffling land acquisition in Nairobi’s prime Upper Hill area, costing the NSSF a hefty Sh115 million. Yet, in a cruel twist of fate for contributors, the title deed for this parcel was revoked as early as April 2010, on the grounds that the land was reserved for public use. This raises serious questions about due diligence and accountability, leaving Kenyans wondering how such a substantial investment could be made in public property.

Furthermore, the NSSF’s investment portfolio appears to be a study in unfortunate choices. The Auditor General’s probe revealed a staggering 17.64% tanking in the value of the Fund’s investments in two companies between 2023 and 2024, leading to a Sh27.2 million loss for members. This downturn, from an initial valuation of Sh157.2 million to Sh127 million, paints a grim picture of investment strategy.

Adding to the woes, the NSSF continues to hold shares valued at Sh38.4 million in a loss-making bank. Perhaps most perplexing is the decision to spend Sh12 billion on government securities, purchasing bonds at a premium and then inexplicably selling them at a loss, resulting in a capital loss of Sh272 million. These moves defy conventional financial wisdom, raising red flags about the expertise and judgment guiding the Fund’s investment decisions.

The audit also highlighted Sh51 million blown on motor vehicle running expenses, including Sh3.2 million on fuel. Additionally, a staggering Sh410.8 million was poured into renovations, with Sh14.4 million of this again procured through questionable requests for quotation, alongside an extra Sh36.3 million on acquiring property and plant. These figures paint a picture of an institution seemingly more focused on internal comforts and inefficient procurement than on the wise management of contributors’ money.

The results of these financial missteps extend beyond monetary losses; they erode public trust and undermine the very purpose of the NSSF. In the same period under review, the Fund significantly underperformed in its new membership drive, registering only 556,306 new members against a target of 650,000 – a 14% shortfall. This gap could be indicative of declining public confidence, a direct consequence of perceived mismanagement and a lack of transparency. To further compound the outrage, while the Fund was bleeding billions, its board of trustees did not leave empty-handed, with a whopping Sh68.7 million spent as trustee compensations, part of a Sh6.9 billion administrative cost.

The report is more than just an accounting of losses; it’s a sobering call for urgent action. It demands immediate and thorough investigations into how such large sums of money could be mismanaged, accountability for those responsible, and comprehensive reforms to safeguard the future of Kenya’s retirement funds.

Source: Auditor General report, Citizen Digital.

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