Auditor General flags Sh8.6bn unremitted NSSF cash

The Auditor-General office has raised an alarm over Sh8.6 billion unremitted National Social Security Fund (NSSF) contributions and delays by the fund in correctly recording money received and settling dues of those retiring.

Auditor-General Nancy Gathungu has, in the latest audit on NSSF books for the year ended June 2022, revealed that Sh1.96 billion mandatory contributions deducted from contributors are yet to reach the fund in addition to Sh6.68 billion late payment penalties.

“In the circumstances, the effectiveness of the internal controls system with regard to debt recovery and management could not be confirmed,” she said in the report.

The uncollected billions of shillings mean contributors are missing out on earning a return on their contributions and also risk losing the money that was compulsorily deducted from them as required by law.

Read: Private firms to battle NSSF for new billions in pension

The amount, in addition to Sh741.52 million, which NSSF already received as members’ contribution but is still held under suspense account—meaning it is yet to be correctly recorded in specific contributors’ accounts—has also been flagged by Ms Gathungu.

The NSSF maintains employer clearing accounts where total contributions from employers are posted before being moved to the respective accounts of members.

Ms Gathungu said the NSSF did not provide any explanation why the amount, which has accumulated over the years, has not been properly recorded in the books of accounts.

“In the circumstances, the effectiveness of the internal controls system on prompt updating of members’ contributions could not be confirmed,” said Ms Gathungu.

NSSF was also put on the spot over delays in processing benefits of retiring members. Some 18,025 benefit claims were pending at the end of June last year.

Some 7,113 claims or 40 percent of the delayed claims were linked to few NSSF technicians who are supposed to match fingerprints to authenticate claims.

Another 12,511 claims were rejected and referred back to branches due to errors and omissions.

“Pensioners and dependents were not able to access their money in time to cater for their basic and other needs due to the delay in claims processing,” said the Auditor-General.

The three concerns, added to several other key matters touching on prior year issues, high investment management expenses, acting positions, and irregular board allowances, saw Ms Gathungu give NSSF books a qualified opinion.

The audit issues put to test NHIF’s ability in managing billions of shillings coming from contributors following the enhanced contributions that started in February.

NSSF monthly collections from members has tripled to about Sh4 billion from the previous Sh1.3 billion after the increased contributions from the earlier flat rate of Sh400 split equally between employer and employee.

Employers and employees are now making a combined contribution of between Sh360 and Sh2,160 every month depending on the salary scale.

NSSF member contributions rose by 10 percent to Sh15.92 billion in the year under review from Sh14.47 billion but this is expected to rise much faster with the enhanced deductions.

Read: NSSF pays fund managers Sh619m fees to June 2022

For the year ended June 30, 2021, the fund paid an interest of 10 percent on members’ contributions to mark the highest payout in seven years.

The return on the 2021/2022 financial year is yet to be made public. NSSF said last month it was in the process of finalising the interest payable on members’ funds based on actuarial valuation of the fund by Zamara Actuaries.

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