Four years at fund trained me to oversee Sh250b pool
By Wainaina Wambu
| Mar 17th 2020 | 6 min read
The National Social Security Fund’s (NSSF) top seat remains one of the hottest in the country.
With one of the highest CEO turnover rates in the past two decades, no one sits pretty at the fund’s corner office.
The kitchen is always bound to get hot with the responsibility of managing the Sh251 billion fund -trusted with safekeeping the retirement cash of millions of Kenyan savers.
Until recently, the State pensions’ body has had over 10 top executives serving in an acting capacity. The newly confirmed Chief Executive Anthony Omerikwa is all too familiar with the hotness of the seat.
He becomes the fund’s managing trustee after serving for four years in an acting capacity.
He describes the four years as an “internship” that has transformed the NSSF into a “new fund.” “We now have very many controls, you can’t get out with a shilling. This is not the old fund but the new we are extensively oversighted and thoroughly audited,” he told Financial Standard in an interview at his office in Nairobi last week.
We felt the hotness of the seat immediately the interview materialised. It was a controlled interview conducted in the presence of a legal officer and publicist amid interjections of “off the record!”
At some point, it seemed impossible to ‘squeeze any juicy item’ from the man managing a fund that now controls nearly a quarter of the Sh1.2 trillion Kenyan pensions industry.
Mr Omerikwa says the operationalisation of NSSF Act 2013 that proposes new rates will grow the fund by over 200 per cent, whose cash pool could lend money to Government.
NSSF currently collects Sh1.2 billion monthly in contributions from members. The asset-rich fund also owns prime properties that return millions in rent.
Omerikwa notes that during his time at NSSF, the experiences that haunt him most are those of the shocked faces of pensioners who come to collect their little dues. Their facial expressions bear the phrase “I wish I had saved.”
Most of them had worked for decades but their contributions were too low. “You can’t remember the day you registered for NSSF, it was most likely mandatory after you’d gotten a job but what you’ll remember vividly is the day you’ll go to pick up your benefits,” said Omerikwa.
Majority of Kenyans contribute only Sh400 to NSSF monthly, where they split the bill by half with their employers.
This means that even after working for 30 years, the maximum an individual can get after retirement doesn’t exceed Sh150,000. Omerikwa cites the impasse over the NSSF Act as a challenge to the fund’s future.
“Once that has been resolved will have a bulk of the money to invest give good returns to our customers,” he said.
Operationalisation of the NSSF Act 2013 would see member deductions rise to Sh1,080 from the current Sh200.
He said other State pension entities were funding projects, noting that the NSSF could do the same if the act was unlocked, in addition to opening up the pensions sector.
“I will have an extra Sh1.4 billion in my disposal every month … we can do a lot including infrastructure funding,” he said. Omerikwa describes the four years he’s served in acting capacity was an “on the job training.”
“I’ve acted for four years, which was on-job training. I was interning for the CEO position, so I have an understanding of the workings of the fund. Prior to that, I was the management representative and I got the institution ISO certified after seven years of attempts and failure. In terms of processes, I understand,” he noted.
Central Organisation of Trade Unions boss Francis Atwoli, one of the NSSF stakeholders, had previously instituted a suit against NSSF for its delayed appointment of a chief executive.
He, however, dropped the suit. NSSF has 12 positions held by acting executives. Omerikwa said they will soon be advertised.
“Now, the board is fully constituted and has hired a consultancy firm to do job evaluations so that we know which positions we are filling. The evaluations have been completed and we’ll be advertising those positions,” said Omerikwa.
NSSF was last month on the spot when Omerikwa appeared before Parliament’s Public Investment Committee to answer audit queries for the financial year 2017-2018, especially on fallen contributions and the unfilled positions. It was revealed that members’ contribution had dropped by nearly Sh3 billion since 2018.
Omerikwa said a tough year marked by a long electioneering period; job cuts and plastics ban had hit hard the local manufacturing industry.
“The collections didn’t fall, we didn’t achieve our targets,” he said, noting that the“collection curve” was now going up.
The collapse of retailers such as Nakumatt also saw them lose money. Nakumatt didn’t remit pension dues to NSSF that it deducted from employees’ salaries. He promised to pay Nakumatt employees their pension because they had evidence that it had been deducted from their payslips and would pursue the administrator for the cash.
“So long as your employer deducted money from your payslip, we’ll pay you and pursue the company. Pension is protected we give you the money first,” he said. NSSF’s investment portfolio has a 14 per cent exposure to property which is one of the Fund’s biggest moneymakers.
The NSSF boss said that their biggest exposure at over 50 per cent at the moment was government bonds due to their low risks and long-term benefit.
The Fund is currently disposing of their low-yielding properties - including the Hazina Plaza in Mombasa that is expected to fetch Sh560 million. The fund also collects Sh650 million monthly from its NSSF building block at Upperhill, Nairobi.
Other buildings include NSSF Mombasa, ViewPark Towers, Bruce House and Hazina Towers.
He said the Hazina Trade Centre in Nairobi was almost complete with occupancy slated by next year, but blamed Nakumatt for the delay of the building whose construction began 2013.
When the construction started, they had a 21-year lease agreement with Nakumatt.
He said Nakumatt had collapsed with about Sh30 million in rent. NSSF has since lodged our claim with the retailer’s receiver.
Omerikwa noted that they’d gotten a proposition from two anchor tenants. The Hazina Trade Centre will have a lettable space 148,176 square feet.
“We are already in the market,” he said. Omerikwa noted that the property market was facing some challenges. He said that Upperhill had eaten into the market of their buildings in the city centre, even though they were still making good returns.
“Our buildings in the city centre are not so much in demand as they used to be when we had 100 per cent occupancy and there was always somebody waiting but the Upperhill has saturated the market and the cost of square feet has also dipped,” he said.
He, however, observed that they were still “making good returns” from with occupancy averaging over 95 per cent.
The Upperhill NSSF building with 97 per cent occupancy nets Sh650 million annually. The fund also wants to diversify its portfolio into the bonds, private equity and renewable energy markets.
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