Kenyan workers could lose two-month retirement savings

NAIROBI,KENYA: Kenyan workers’ retirement savings worth Sh1 billion are at risk owing to unsecured investments in the collapsed Imperial and Chase banks.

This would translate to a loss of two months’ worth of contributions for the 2.5 million members at the present monthly deductions of Sh200.

The funds were lent by National Social Security Fund to the two banks in corporate bonds and term deposits before their spectacular collapse two years ago.

In his latest report, Auditor General Edward Ouko has explained the extent of likely losses, which he blamed on poor management by private wealth management firms.

Consequently, he wants the four fund managers who were paid Sh182 million last year dropped and new ones appointed.

“The fund does not appear to have received value for money…” Mr Ouko says in his audit report.

Fund managers

From the two banks, the fund managers have recovered only Sh26 million, just about an eighth of the amount invested.

In his advisory to kick out the firms, Mr Ouko added that the losses could have been averted had the investments been insured, as is the practice.

“It is recommended that the fund managers be changed on expiry of their contracts,” read the report that will be presented to the National Assembly.

Recent events that involved the acquisition of Chase Bank by Mauritius lender SBM offered some comfort that the cash could be recovered sometime in the future.

Some Sh667 million was lent to the banks in bonds while Sh330 million was held in term deposits with varying maturity dates.

Old Mutual, Britam, Stanlib and GenAfrica were contracted to manage and invest the workers’ savings.