FKE calls for NSSF restructuring

October 29, 2008
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, NAIROBI, October 29 – The Federation of Kenya Employers (FKE) has called for a holistic review of the organisational structure of the National Social Security Fund (NSSF).

FKE National Chairman Patrick Obath admitted on Wednesday that an overhaul of the current operational system at the pension scheme was urgently required to ensure professionalism and efficiency in the management of public funds.

“It is a matter of public knowledge that NSSF has been plagued with irregularities for a long time. It is also clear that proper control measures need to be employed to ensure stability in the operations of the Fund, without interference by either the Board of Trustees or the staff,” he said.

Mr Obath who, together with the Federation’s Executive Director Jacqueline Mugo sit on the besieged NSSF Board, told reporters that revamping the organisation of the scheme would also result in the separation of the role played by those in the administration of benefits, investments of funds and financial management.

This, he explained, would give the Board the authority and independence required to exercise meaningful oversight.

“The Federation wishes to state that the current management structure undermines the supervisory role of the Board,” he complained.

Labour Minister John Munyes recently announced plans to propose amendments to the NSSF Act so as to give the government control over the Fund’s management.

The board was recently reinstated by the High Court after the Central Organisation of Trade Unions (COTU), which is represented in the panel, sought legal redress to challenge Munyes’ decision to dissolve it.

Before it was disbanded, the Board had sent seven senior managers at the Fund packing after it emerged that the scheme could lose billions of shillings invested through Discount Securities Limited which was reported to be facing a financial crisis.

Mr Obath therefore called for urgency in resolving the stand-off warning that without a functional board and with the top management on compulsory leave, the NSSF’ Sh90billion portfolio was vulnerable to further losses.

“In addition, the NSSF is exposed to the tune of Sh18 billion in terms of pending litigation and therefore long and historic exposures need to be speedily resolved in order to protect public funds,” he said.

He said FKE had proposed several measures such as the need to catalogue all potential losses that the Fund has and advice the tripartite partners on how to address the issues.

Mr Obath said a professional firm should be hired to competently manage the Fund on a temporary basis while long-term remedial measures were being sought. 

The trustees were mandated with conducting an open and transparent recruitment process for a new Managing Trustee before the team was dissolved to pave way for investigation into allegations of misappropriation of funds at the retirement scheme.

“We propose that thorough and conclusive investigations be carried out without exception in order to establish the actual culprits, prevent exposure of additional public funds and to clear the names of those whose reputations have been tarnished in the media,” he offered.

Mr Obath said he was ready to resign as the FKE chairman as well as from the NSSF Board if the probe finds him guilty of any wrongdoing.

He accused Mr Munyes of being unavailable for discussions to address the situation and warned that the ‘bad-blood’ between them could affect the management and implementation of labour issues in general.

“This emerging and worrying trend where the ministry consistently acts unilaterally instead of through consultation and dialogue with the social partners should be corrected in the interest of implementing fundamental reforms in labour matters,” he added.

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