Thousands of retired workers have been facing delays in processing of their pensions due to a shortage of fingerprint experts at the National Social Security Fund (NSSF).
This was one of the issues raised by Auditor-General Nancy Gathungu in the qualified opinion she issued on NSSF’s financial statements for the year ended June 30, 2022.
Ms Gathungu said some 18,025 benefit claims by pensioners were pending by the close of the financial year, with 7,113 or 40 per cent of the delays arising from few fingerprint technicians to authenticate the claims.
She revealed that 12,511 claims were rejected by NSSF and referred back to branches as a result of errors and omissions in the beneficiary’s personal information and ineligible bank account details.
“In addition, pensioners and dependants were not able to access their money in time to cater for their basic and other needs due to delays in claims processing. In the circumstances, the effectiveness of internal controls systems in processing of members benefits could not be confirmed,” she said.
Ms Gathungu noted that NSSF is understaffed as it had 1,145 workers, which is 300 less than the 1,445 employees it needs to effectively carry out its operations, and that some 58 positions did not have permanent employees including some critical ones.
The auditor revealed that the fund generated income of just Sh8.7 billion during the year, which is 21 per cent of the Sh40.9 billion it had budgeted for.
“The under-utilisation of approved budget and under-receipt of revenue may have negatively affected service delivery to the public,” said Ms Gathungu.
She further revealed that NSSF spent Sh7.46 billion, which is Sh1.75 billion more than it was legally allowed to. The fund’s costs hit Sh7.46 billion, which is 2.6 per cent of its Sh285.72 billion assets. This is contrary to the NSSF Act that allows it to spend up to 2 per cent of its total assets.
During the period, the fund’s assets grew marginally by Sh1.2 billion from Sh284.5 billion to Sh285.7 billion as member contributions grew by 10 per cent from Sh14.47 billion to Sh15.92 billion.
Ms Gathungu also queried NSSF over its failure to collect Sh8.63 billion unremitted member contributions, which includes mandatory contributions of Sh1.95 billion and outstanding penalties of Sh6.67 billion.
“Although management has indicated that recovery efforts through alternative dispute resolution, court action and Intergovernmental Relations Technical Committee for cases involving county governments are in progress, the process was not successful,” she noted.
The valuation of shares held by NSSF in non-performing quoted companies—Athi River Mining, East African Portland Cement Company and Sameer Africa—valued at Sh221.6 million, was also questioned.
Contributions to NSSF were raised in February, which means the fund will have additional billions from workers to manage in the current financial year.
The NSSF Act, 2013 increased salaried employees’ monthly deductions from Sh200 to Sh600 for the lowest earner and from Sh320 to Sh1,080 for top earners under a graduated scale, with the upper limits set to rise every year.
