NSSF Managing Trustee Tom Odongo says the fund has already sent home 305 employees and will be letting off the remaining 200 in the coming few weeks.
Odongo says the move is part of the ongoing reforms to enable members get full benefits from the fund. The layoff plan will save over Sh600 million annually.
“We do our calculations and here we are talking about savings and investment to bring value to our NSSF members. By releasing such a number of employees, you can see what kind of salary costs savings we are talking about,” Odongo told Capital FM Business on Wednesday.
The fund which has close to 1,700 employees has been in the limelight after it was realised a huge chunk of Kenyans’ savings are spent on administrative costs.
For instance in 2011, the fund spent Sh5.2 billion of the Sh6.8 billion on administration, meaning only Sh47 out of every member’s monthly contribution of Sh200 was actually invested.
That means that the fund is currently using Sh153 to manage Sh200, which is nearly 75.5 percent and it is 400 times more than what private pension schemes claim as expenses.
But Odongo says this is expected to change very soon and ensure the members’ contributions go to gain value for them to get good returns after their retirement.
He said in line with the ongoing reforms, the fund also plans to invest more on new technology not only to help cut running costs but improve efficiency.
“We are now having the latest ICT platform in place and it therefore meant we had to cut down on our administration costs,” he said.
In December last year, NSSF launched a new Information Technology solution to boost its organisational efficiency.
The Sh300 million Enterprise Resource Planning (ERP) solutions will facilitate real-time management across its core business functions.
Among other benefits, the new ERP system will play a key role in the realization of NSSF’s pledge to reduce its member benefits payout turnaround time less than five working days and significantly help in raising integrity and plugging organizational leakages.