NAIROBI, Kenya — The Auditor-General has raised serious governance, financial, and compliance concerns at the National Social Security Fund (NSSF), warning that weaknesses in investment management, tax compliance, and internal controls expose members’ savings to significant risk.
In the audit report for the financial year ended June 30, 2025, Auditor-General Nancy Gathungu flagged billions of shillings tied up in idle properties, unverified investments, unpaid taxes, and stalled projects, some of which have remained unresolved for years.
Among the most striking findings is Sh13.06 billion in outstanding taxes, a liability that could attract heavy penalties and interest.
The report states that the taxes were reflected in the Fund’s net assets available for benefits, contrary to Regulation 23(2) of the Public Finance Management (National Government) Regulations, 2015, which requires accounting officers to comply with all statutory obligations.
“In the circumstances, management was in breach of the law,” the Auditor-General concluded.
The audit also raised alarm over non-performing investments in unquoted equities worth Sh199.49 million, representing 11.39 million shares that have shown no appreciation for four years.
Management failed to take remedial action, such as impairment or divestment, casting doubt on value for money.
Similarly, quoted equity investments valued at Sh401.82 million held in three companies could not be independently verified, while their market value declined by Sh47.08 million compared to the previous year.
In the property portfolio, the Auditor-General found that five prime buildings in Nairobi’s Central Business District, valued at Sh4.02 billion, remained idle throughout the year under review.
The unutilised assets denied the Fund rental income, in breach of the NSSF Investment Policy Statement, 2020, which requires prudent and productive investment of members’ funds.
Rental management weaknesses extended further, with rent arrears of Sh5.18 billion accumulated from eight tenants who consistently failed to pay.
Some tenants continued occupying NSSF premises without valid lease agreements, despite court injunctions and prolonged disputes.
Governance lapses were also noted in human resource management.
The Fund paid Sh21.20 million in acting and special duty allowances to staff who served beyond the six-month statutory limit without Board approval, contrary to Public Service Commission and internal human resource policies.
The audit further highlighted obsolete assets worth Sh5.84 million that were approved for disposal but never cleared, and a stalled boundary wall project in Bamburi, where initial costs of Sh16.56 million and subsequent re-contracting worth Sh6.23 million yielded no confirmed value for money.
Concerns were also raised over the Staff Mortgage Scheme, where deposits of Sh1.33 billion and staff loans of Sh135.22 million were operated without audited accounts or approved regulations, in violation of the Public Finance Management Act, 2012.
Additionally, advances and deposits amounting to Sh290.42 million tied to stalled housing projects, including Nyayo Estate Phase VI in Embakasi, remain outstanding, with recovery described as doubtful.
Despite the findings, the Auditor-General stated that, except for the highlighted matters, nothing else had come to attention to suggest that public resources were not applied lawfully and effectively, as required under Article 229(6) of the Constitution.
The report underscores growing scrutiny on public pension funds amid rising concerns over governance, transparency, and the protection of workers’ retirement savings, placing renewed pressure on NSSF management and the Board of Trustees to implement corrective action.
