Parastatals, local authorities hold Sh580m pension funds

Thursday, October 14th, 2021 00:00 |
Hazina Trade Centre in Nairobi. The Auditor General had questioned delay in completion of the project. NSSF says the building is now complete and occupied. Photo/File

Thousands of public servants risk losing their pensions because some parastatals and the defunct local authorities have failed to remit their contributions to the National Social Security Fund (NSSF).

State agencies have not remitted contributions amounting to Sh580 million and penalties of more than Sh7 billion.

Acting General Manager Corporate Affairs Austin Ouko said the largest portion of the debts, Sh241.3 million, had not been remitted by defunct local authorities and government institutions.

The Kenya Ports Authority (KPA) had not remitted Sh185.9 million while the Kenya Wildlife Services (KWS) owes Sh146 million.

Responding to queries raised by the Auditor General, Ouko said the Fund had taken steps to recover all the outstanding debts.

In her report, Auditor General Nancy Gathungu states a review of the members contributions status as at June 30, 2019, revealed contributions receivable estimated at Sh5.8 billion had been included in the financial statements under contingent assets.

This comprised of mandatory contributions of Sh580,759,618.45 and penalties of Sh5,121,985,736.95.

“Although the management has indicated that recovery efforts are in progress, as at the time of audit in April 2020 the contributions receivable of Sh5.83 billion were still outstanding and no satisfactory explanation was provided for non-recovery,” read the report.

According to the auditor, this was an indication of weak controls over recovery of unremitted contributions.

In response, the Fund states that as at 30th June 2019, the Fund was owed Sh580 million in mandatory members’ contribution arrears.

Hazina Centre

“We have however put in place measures to recover the money which include engaging the inter-governmental Relations Technical Committee (IGRTC) and the Council of Governors (COG) to recover the Contribution arrears owed by the defunct local authorities. This engagement is an ongoing exercise,” said Ouko.

He added that legal action had been taken on some employers like KWS and KPA who had disputed the debts and sought legal opinion from the Attorney General’s office on their validity.

“We have also employed the Alternative Dispute Resolutions including recovery of debts through binding installments undertaking for example Kenyatta National Hospital among other employers who are honouring their agreements,” Ouko revealed.

On the delayed construction of Hazina Trade Centre in Nairobi, Ouko said the project had since been completed and tenants were already occupying spaces.

Gathungu had questioned the delay of the project for more than a decade.

“Included in the assets under construction balance of Sh3.2 billion is an amount of Sh2.48 billion in respect of Hazina Trade Centre whose construction was ongoing as at the time of audit.

“The project was awarded at an initial contract sum of Sh6.7 billion for construction of 36 floors tower which was subsequently scaled down to 15 floors at a reduced contract sum of Sh4.2 billion.

The project has had a number of extensions, the last authorised one being 31 December 2019,” says the auditor.

The management explained that the Covid-19 pandemic and the resultant restrictions had adversely affected the contractor’s supply chain and hence the slow pace at which the project was being implemented.

“In addition, a perusal of other relevant project documents revealed a claim of Sh871 million by the contractor arising from idle stoppage of works,” notes the auditor.

Ouko said the claim had since been settled and the Hazina Trade Centre was completed on 1st September 2021 and is being rented out.

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