NAIROBI, Kenya Apr 18 – The National Social Security Fund (NSSF) on Wednesday moved to allay fears of any acts of omission in the recent Sh4.2 billion out of court commercial claims settlements.
In a media statement, NSSF acting Managing Trustee Tom Odongo disclosed that the settlements were effected as part of a strategic effort to clean the funds balance sheet which currently features liabilities in excess of Sh18 billion.
Odongo further explained that the claims were a risk to members’ funds and always created a revenue leakage in terms of legal costs payable to lawyers and accumulated interest.
The decision to settle the claims out of court, he said has gone a long way in clearing the past cases enabling the fund to move forward on a clean slate.
In the recent highlighted matters relating to Pan Africa Builders & Contractors, Mugoya Contractors and Sololo Outlets, Odongo explained that the fund had been perpetually held hostage by liabilities amounting to Sh 4.2 billion which had in all instances been upheld by various commercial courts.
The NSSF CEO confirmed that following successful out of court settlements, the Fund had managed to reduce the attendant liability to Sh1.4 billion leading to a more than Sh2.8 billion saving for the fund and its members.
“The Board of trustees, in negotiating the matters out of court, has substantially reduced the contingent liabilities which are a burden to the members in the long term and also obtained cost savings which have positively enhanced our balance sheet,” Odongo explained.
He added: “In all our transactions, we have deliberately and strictly followed all legal considerations and directions to the latter as we seek to maintain our mandate to protect NSSF members’ interests.”
In compliance with the Retirement Benefits Authority (RBA) Investments guidelines and in a bid to ensure prudent investments of funds held by NSSF, Odongo said that the fund has managed to recruit and retain professional fund managers and custodians.
He disclosed The Fund, is currently paying a return of 7.5 percent on member accounts and will continue improving the rate of return on its investments for the benefit of members.
Odongo assured its members that NSSF would continue to put up a spirited fight against any attempts to strip it of its assets’, even as it embarks on a turnaround process.
The Fund is set to be transformed into a National Social Security Pension Trust (NSSPT), which is expected to further boost its corporate governance structures, integrity, transparency, and accountability.
When operationalised, NSSPT will also provide its members’ with monthly benefits unlike the current system where NSSF provides lump sum benefits upon retirement.
The Acting Managing Trustee explained that the turnaround process would also entail a systematic legal recovery of all NSSF assets irregularly acquired by individuals in the past.
“Let it be known that the current Board of Trustees and Management team is unfazed and will not be deterred by any forces keen on perpetrating corruption. We have turned a new clean page for this organisation,” Odongo assured.
“We shall extend the necessary support to the relevant law enforcement and oversight authorities to ensure that any monies or assets irregularly siphoned out of NSSF are duly recovered.”
Odongo reaffirmed the Fund’s reform process which commenced in 2004, was still on course particularly with the publishing of the NSSF Transformation Bill.
“The process is ongoing and the Board held the Stakeholders’ Forum to discuss the Bill on 8 March, 2012 and it will now be presented to the Parliamentary Committee on Social Security and Welfare,” Odongo explained.
The NSSF is a statutory public trust which is mandated role is to provide social security protection to workers in the formal and informal sectors.