Home General Retirees’ cash at risk as NSSF makes costly blunders

Retirees’ cash at risk as NSSF makes costly blunders

by kenya-tribune

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The sunset years of millions of employees is at risk following investment blunder by the very agency meant to safeguard and grow their nest eggs.

Flagged by the Auditor-General Edward Ouko in his annual general reports, the National Social Security Fund (NSSF) has hit hard ground in projects running into billions of shillings with legal and other barriers occasioned by bad decisions.

The auditor, for example, could not understand why NSSF sold land in November 2011 and only earned a tenth of the sale price without taking any action to get the rest of the money paid.

The 69.16 acres in Mavoko municipality were sold after it was subdivided into seven plots of 9.88 acres each to reap from the budding real estate boom that was fast rising then.

While the sale price was set at Sh116 million, NSSF could not explain why it had only received a tenth and seven years later, nothing is happening.

“Only Sh12.6 million or 10 percent was paid vide Miscellaneous Receipt M010022315 dated August 23, 2011. The balance of Sh113.4 million which was to be paid within 90 days from the date of execution of the agreement has not been settled to date. No reasons were provided for the failure to terminate the sale agreement upon the expiry of the 90 days’ execution period provided for in the contract agreement,” Mr Ouko wrote.

NSSF may have made much more money since the land has now appreciated many times in the seven years. The auditors were also concerned that should the sale dispute be taken to court, NSSF will still pay more in legal fees.

AMS Properties Limited, the real estate firm that bought the land from NSSF, said they were yet to be shown the exact boundaries on the land as was agreed in the 2011 sale deal.

The plot’s reference number also changed in two different survey plans with Plots L.R Nos. 20183, 20184 and part of 20181 overlapping with L.R. Nos. 22067, 22092 and other plots, according to the lawyers representing the real estate developer.

AMS also said there are squatters on the plots, making it had to use them and hence says it has suffered instead.

“As a consequence of the failure by NSSF to address the above said issues, our client has not paid the balance of the purchase price and the properties have not been transferred to its name. Our client was only required to pay the said balance of the purchase price upon NSSF being able to pass good titles and vacant possession of the properties to our client,” the lawyers wrote to Sunday Nation in response to queries why they had not paid NSSF.

Efforts to get response from NSSF communications manager Chris Khisa were futile as he failed to honour his promise to get back since January 3 and ignored subsequent follow ups.

Several rental incomes that the fund is expected to earn have also been hanging in limbo, with some agents said to be collecting and keeping the rents. Unnamed agents had collected some Sh3.6 million from Hazina, View Park Towers and Nyayo estate and failed to remit to NSSF.

Efforts to seek legal redress have been in vain. EACC is said to have picked the matter and assets belonging to the agents are being pursued.

Some Sh7.2 million was lost through fraud at Westlands branch as another tenant identified as Kenya College of Medicine gave fake cash deposit slips of Sh9.3 million. Both cases are in court, all pointing to risks around retirement savings for the millions of workers who contributed more to the kitty at Sh13.54 billion, up from the Sh12.8 billion in 2015/16.

Its Hazina Plaza in Mombasa has had various tenants who have defaulted in rental obligations. In 2010, another tenant signed to lease the property for 10 years at Sh27 million per year with a cost of 10 per cent escalation after every two years. After a 30 months’ grace period, the tenant has continued to lag in rent payment, with Sh239.5 million remaining uncollected.

Auditors also faulted NSSF for installing a CCTV at the Mombasa Social Security’s building at Sh48 million. The CCTV which had no maintenance contract was not functional and is said to have developed technical faults.

The fund also over-collected by Sh2.2 million beyond its budget and spent Sh548.5 million less, resulting into what auditors suspected to have been an overbudget of about eight per cent to be seen as well-performing.

In the year to June 2017, the fund paid its 11 directors Sh2.45 billion, with Sh1.15 billion in five sittings by the Human Resources and Legal committees. One director earned Sh550,000.

The board allowances shared among members of the three committees were Sh1.21 billion more than what the fund paid beneficiaries at Sh3.66 billion and much less than its staff costs, which had increased to Sh3.88 billion.

Efforts to reach Cotu secretary-general Francis Atwoli over the perks were also futile.

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