Deep job cuts leave Sh2 billion hole in NSSF contributions

National Social Security Fund Managing Trustee Anthony Omerikwa when he appeared before a parliamentary team last year. PHOTO | DIANA NGILA Retrenchment of employees slowed down the National Social Security Fund (NSSF) pension’s collection in the year to June 2018.

The fund failed to collect Sh2 billion as result of firms either going under or shedding jobs.

The NSSF had budgeted to receive Sh15.6 billion in pension’s contributions, but managed to net Sh13.5 billion resulting in a 13 percent drop in the year 2017/18.

Data submitted to Parliament shows that the huge loss was largely occasioned by collapse of businesses and financial crises.

Mr Anthony Omerikwa, the managing trustee, in submissions to Parliament cited mass layoffs of employees in blue-chip companies such as Kenya Commercial Bank (KCB) and Barclays Bank, which has since been renamed Absa.

“The reasons for non- achievement in collections for the financial year 2017/18 include … layoffs in KCB and Barclays due to capping of interest rates,” Mr Omerikwa told MPs. KCB Group’s employee headcount fell by 240 in the six months to June 2019. The group had 5,980 employees at the close of June 2019 compared to the 6,220 it closed 2018.

From a staff size of 5,162 in 2012, the number of employees grew to a peak of 7,509 in 2015 before starting to shrink.

In 2017, Barclays laid off 323 employees in an exercise that included shutting down 12 branches before opening a voluntary staff exit window in 2018 which saw 78 full time employees take up the option. Total headcount dropped by 142 to close the year at 2,128 employees in 2018.

Mr Omerikwa spoke when he appeared before the National Assembly’s Public Investments Committee chaired by Mvita MP Abdulswamad Nassir during the scrutiny of NSSF books of account for the year under review.

Mr Omerikwa also blamed the collapse of once profitable retail chains, Nakumatt and Uchumi for the dwindling pension’s contributions to the fund.

Nakumatt, once giant retailer went into voluntary supervision in early 2018 after seeking protection from its creditors.The retail chain was forced to shut dozens of outlets from 2017 as it struggled to repay Sh38 billion it owed suppliers, landlords and other creditors. By February 2017, it had 60 branches that dropped to six in September 2018 rendering hundreds of employees jobless.Cash-strapped Uchumi supermarkets has struggled to raise new capital to resuscitate its operations, even as it fights frequent stock-outs and landlords. The retailer had 1,355 […]

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