Inefficiency cost NSSF Sh1.7bn, says labour group
What you need to know:
- The Cotu report shows that NSSF’s collection of funds from employers had not risen beyond 65.2 per cent since last year, with the lowest standing at 42 per cent.
This means that instead of collecting Sh3.27 billion between January and June this year, NSSF only collected Sh1.526 billion.
The National Social Security Fund has failed to realise maximum collections from employers due to inefficiency, the worker’s umbrella union has claimed.
The Central Organisation of Trade Unions (Cotu), whose boss Francis Atwoli is locked in a dispute with Labour Cabinet Secretary Kazungu Kambi, says NSSF failed to collect Sh1.7 billion from employers between January and June.
A survey conducted by Cotu shows that the fund last year failed to collect Sh5.3 billion from employers. The labour organisation attributed this to corruption and inefficiency.
“Our assessment is focused on the loss of funds by NSSF due to inefficiency. The loss was incurred due to failure by the NSSF to collect NSSF contributions and making prudent investment decisions. The loss is also due to corrupt practices within the fund,” said Cotu.
The Cotu report shows that NSSF’s collection of funds from employers had not risen beyond 65.2 per cent since last year, with the lowest standing at 42 per cent.
This means that instead of collecting Sh3.27 billion between January and June this year, NSSF only collected Sh1.526 billion.
Lost
“Between January and June 2014, a total of Sh1.744 billion has been lost by the fund. This is against an expected contribution of Sh3.270 billion. This means that the amount lost was 53.33 per cent of the expected contribution in 2014,” says the report.
For last year, Cotu’s survey showed that NSSF collected Sh4.3 billion from employers and individuals instead of the expected Sh9.6 billion.
“The expected NSSF contribution for 2013 was Sh9.6 billion. The fund’s loss during the period was Sh5.3 billion. The loss of funds has been occasioned by several factors, chief of which is mismanagement and corruption,” says the report.
During this period, the umbrella workers’ union said, Sh2.844 billion was paid to beneficiaries, leaving little money for investment.
Cotu explained that it undertook the survey since the inefficiency at NSSF burdened employers and was also a loss to employees, who are the beneficiaries of the money.
“Efficiency in the utilisation of NSSF contributions should be seen as adherence to the NSSF Act and the regulations that guide investment of the fund. Such compliance would ensure that the correct amount of members’ contributions are collected and credited to their accounts,” says the report.
