NSSF defends ‘mysterious’ payments after Auditor General leak

By Steve UMIDHA

The National Social Security Fund (NSSF) was Monday forced to defend some ‘suspicious’ transactions flagged for accounting mischief by the Auditor General.

Payments to Kenyan retirees and their beneficiaries totaling over Sh266Million were returned to NSSF in the financial year period ended June 2021, raising audit queries in its ledger books.

NSSF has however repulsed those claims, citing partial reconciliation process as the reason for the fictional inconsistency in the amounts in question.

“It should be noted that bank reconciliation is a continuous process. The outstanding items are largely due to timing differences for contributions deposited directly into the bank accounts before the employer presents the detailed returns for receipting,” reads a statement by the fund’s Manager – Public Relations and Communications Dr. Christopher Khisa

Reconciliation is an accounting process that compares two sets of records to check that figures are correct and in agreement.

The process is used to ensure that the money leaving an account matches the actual money spent and is ideally done by making sure the balances match at the end of a particular accounting period.

In her report of the fund’s financial performance for the year in review, the Auditor General Nancy Gathungu last week queried cash returns in the fund’s bank accounts but were oddly missing in the cashbook provided for analysis by the state accountants.

Ms. Gathungu, however, noted that proper accounting explanation and relevant details were not satisfactorily provided in her audit examination of the fund’s performance for the period in question.

According to the audit report, the accuracy of net assets available for benefits worth over Sh1.4 billion could also not be appropriately established.

“The long outstanding deposits are receivables but are incorrectly included in the payables balance…in the circumstances, the accuracy, completeness and fair statement of the payables and accruals balance totaling Sh1,431,691,147 as at June 2021 could not be confirmed,” reads in part Gathungu’s report.

Further, the report found that the fund deliberately failed to record by omission of over Sh16million it had invested but earned income interest from corporate bonds.

NSSF largely makes handsome returns by investing in government securities, corporate bonds, equities, properties and other long-term asset vehicles besides deposits.

The bond, according to NSSF, was expected to mature in August 2021 “and had been booked accordingly, but it was received earlier in June 2021.”

“The 16-million-shilling interest from the bond in question was actually received by our Fund Custodian bank in June 2021 together with the principal and was properly accounted for in the books of accounts and this was confirmed by the Funds custodians,” noted Khisa.

This comes amid concerns that over 10 million Kenyans are sleepwalking into a retirement crisis as they fall short of adequate savings once they leave work.

Statistics show that less than 10 per cent of Kenyan population retire financially independent.

What’s worse, NSSF offices have become synonymous with long queues of beneficiaries continually seeking their benefits with never-ending follow-ups, despite recording a relatively improved performance in net earnings for the year just ended.

https://www.businessdailyafrica.com/bd/news/ex-nssf-boss-three-brokers-convicted-of-sh1-4bn-fraud-3697752

The net increased Scheme’s income grew by over Sh 35 billion in the year ended June 2021 compared to Sh14 Billion it announced in a similar period a year earlier.

The decline in contribution and benefits was attributed to COVID-19 lockdown which affected businesses and movement in the fourth quarter. A net increase in scheme funds of Sh14.5billion was achieved in 2020.

Last year, however, saw member contributions nearly triple owing to the lifting of all movement restrictions that had been put in place to curb the spread of Covid-19.

Member contribution declined by 2.4 percent from Sh15.10B in 2019 to Sh14.733 billion in 2020, while benefits paid to members lessened by 10.2 percent from Sh4.94 paid in 2019 to Sh4.43 billion paid in 2020.

In an attempt to increase member contributions to the fund through the controversial National Social Security Fund (NSSF) Act of 2013 which had sought to increase workers monthly deductions was is September declared unconstitutional by Employment and Labor Relations Court – in a judgement that declared the section of the law illegal and unconstitutional over Parliament failure to refer the bill to Senate prior to the enactment.

The decision by the court followed a suit by Kenya County Government Workers Union which sued the NSSF Board, former Labor Cabinet Secretary Kazungu Kambi, Retirement Benefits Authority and Competition Authority claiming that the increased rate as stipulated in the NSSF Act 2013 negatively affects pensioners.

The County workers union had argued that the pensioners faced the risk of being forced to join two parallel social security schemes or leave their current schemes to other inferior ones, if the rates were allowed to prevail.

 246 total views,  1 views today