NSSF headquaters.[ Photo/Kenya manual]In the period ending June 2016, The National Social Security Fund (NSSF) spent more than 40 per cent of the workers’ contributions on administration costs squeezing retirees’ returns.The latest financial statements show, the state-run pension scheme used Sh172 to manage each Sh400 monthly contribution, translating to 42.9 per cent of collections.With costs amounting to 3.1 per cent of total assets, NSSF is in breach of the set two per cent ceiling.This reduced the amount of cash available for investments and dimmed retirees’ returns.Though the NSSF managed to double returns to pensioners to six per cent, it was lower than the 12.5 per cent paid 2015 and inflation at 6.3 per cent, meaning real average earnings were negative 0.3 per cent.The NSSF Act (2013) requires administrative expenses to be below two per cent of its total assets for the first five years of becoming law, which would translate to a cap of Sh3.3 billion in the year under review.Section 50(2) of the law reads, “The board shall thereafter take necessary measures to ensure that the percentage reduces and is capped at 1.5 per cent in the sixth year”.Funds expenses stood at sh 5.5 billion in the year, against Sh12.8 billion collections in the period under review.This means that the NSSF was left with only Sh28 to invest out of each member’s direct monthly contribution of Sh200. Employers top up another Sh200 to make the total contribution Sh400.The employee costs was higher than the Sh3.1 billion it paid members as returns from their contributions.The NSSF, which recently converted to a public pension scheme, is obliged to make monthly payments to retirees unlike previously when it paid a measly lump sum on retirement.

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