14 December 2012

Kenya: NSSF Puts Off Plans to Retrench Workers

Nairobi — The National Social Security Fund (NSSF) has put off plans to lay off some of its workers as part of its restructuring and rebranding exercise.

The Fund's Managing Trustee Tom Odongo says the management and the board have decided to first exhaust other cost cutting measures.

Details released for the first time in the annual report and accounts of the Fund and which were presented during the first ever Annual General Meeting this year indicated that NSSF uses Sh153 to manage Sh200 contributed by members.

"We are not keen on staff layoffs at the moment because we are still putting systems in place with the relevant positions that are there. But we will review the situation come the end of March. And being an election year the issue of layoffs may be very sensitive," Odongo told Capital Business.

A source at the Fund had earlier indicated that the management had written to the Ministry of Public Service and the Labour Ministry seeking the green light to send home close to 500 staff, out of the 1,700 employees at the Fund.

However, Odongo said the issue will be delayed or even cancelled in the end if the Fund manages to get more options of reducing its expenses.

"By going on automation we will be cutting down on our paper work expenditure. There is also going to be a lot of EFT (Electronic Fund Transfer) payment through the banks. We are also going to have automated voucher systems and so on," Odongo added.

The Fund on Friday launched a new Information Technology solution to boost its organisational efficiency which is among the measures being implemented to streamline operations and reduce administrative costs.

The Sh300 million Enterprise Resource Planning (ERP) solutions will facilitate real-time management across its core business functions.

"Among other things, contributors will be able to access their statements online, and if you are an employer, you don't have to come to our offices with a long list of employees to update their accounts, you can do it online at your comfort," Odongo said.

In 2011, the Fund spent Sh5.2 billion of the Sh6.8 billion collected on administration, meaning only Sh47 out of every member's monthly contribution of Sh200 was actually invested.

In the previous financial year, the administrative expenses consumed just over half of the members' contributions of Sh6.7 billion, also revealing a worrying cost management during the period.

"We know this is a key issue but as I said earlier we have to look for all options. But in the end, we need to reduce our expenses," he opined.

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