NSSF audit flags Sh16bn losses, Sh2m desk and risky bond trades
Audit exposes deep financial lapses at the pension fund
Kenya’s Auditor General has put the country’s main pension fund on the spot, flagging billions of shillings in losses, inflated purchases, and questionable investment calls. In a report covering up to June 2024, Nancy Gathungu’s office says the NSSF ran up more than Sh16 billion in losses through ghost taxes, bad trades, idle assets, pricey travel, and lavish renovations—risking the retirement savings of millions of workers.
The sharpest blow came from bond trades. The fund bought bonds worth Sh12 billion at a premium, then sold them at a loss. The audit says some of these bonds carried high capital losses and low yields, and management didn’t weigh the losses against the expected income. In short, the trades did not pass a prudence test for a long-term pension investor.
Procurement was another red flag. The fund spent Sh36 million on property, plant, and equipment, including Sh2.08 million for a single reception desk. It also paid Sh3.2 million for fuel in cash, sidestepping normal procurement steps that require competitive quotes, clear approvals, and digital audit trails. These choices weaken accountability and make it harder to trace where the money actually went.
Tax handling was messy too. The NSSF wrongly paid Sh904 million to the Kenya Revenue Authority, earned no interest on the overpayment, and couldn’t show credible progress in recovering the cash. That is money from contributors sitting in the wrong account with no clear plan to bring it back.
Real estate, a major asset class for the fund, showed its own risks. The NSSF paid Sh115 million for land in Upper Hill whose title was later revoked after it was found to be public land. The matter is in court, and the Auditor General issued a modified opinion—auditor-speak for “there’s a problem here that changes how you should read the accounts.”
Worse, the fund is sitting on five idle properties in Nairobi’s CBD valued at Sh4 billion. Empty buildings bleed money. They attract service costs, security, and maintenance—without generating rent. For a pension fund, that is the opposite of what contributors expect.
- Reported total losses linked to poor controls: Sh16 billion
- Losses from bond trades: Sh12 billion
- Reception desk purchase: Sh2,080,000
- Irregular cash fuel payments: Sh3.2 million
- Wrongly paid taxes to KRA: Sh904 million
- Land purchase later revoked: Sh115 million
- Idle CBD properties: Sh4 billion in value
Why do these findings matter? Pension funds are supposed to be boring and safe. They invest for the long haul to protect members from market shocks and to earn stable income. When a fund buys bonds at a high premium and sells at a loss, it burns capital that is not easy to replace. When it pays for fuel in cash or splurges on furniture, it signals weak controls. When it parks billions in idle buildings, returns drop while costs rise.
The Auditor General’s job is to test whether public institutions spent money lawfully, effectively, and with value for money. This report suggests gaps on all three fronts. The law—through the Public Finance Management framework—expects public bodies to show prudence, transparency, and competitive procurement. The Public Procurement and Asset Disposal Act sets the rules for how purchases are planned, priced, approved, and recorded. Cash purchases and inflated items clash with that spirit.
On investments, pension funds typically follow strict policies: limit risk concentration, match assets to liabilities, and compare yields to any capital losses. If you buy a bond above its face value, you need income over time to offset that premium. Selling early often locks in a loss unless yields have moved in your favor. The audit points to cases where that basic math didn’t add up.
Take the Sh2.08 million reception desk. High-end office fixtures do exist, but public entities usually show competitive pricing, multiple quotes, and clear technical specs. Without those, value-for-money questions are inevitable. That single line item became the symbol of excess, but it’s the pattern—fuel cash purchases, idle assets, and missing recovery plans for tax overpayments—that tells the bigger story.
The tax overpayment to KRA deserves closer scrutiny. Public entities do sometimes overpay or misclassify taxes, then seek refunds or offsets. But the audit says there was no evidence of meaningful recovery efforts and no interest accrued. That is dead money that should be working for contributors, not sitting idle in government systems.
Real estate decisions carry long tails. The Upper Hill parcel shows how title risks can erase value overnight. If a court upholds the revocation, the fund may have little to show for the Sh115 million spent, plus legal costs. The idle CBD assets highlight a separate problem: poor asset utilization. Buildings should be earning rent, appreciating in value, or being redeveloped. If not, they drag down returns.
Travel and renovations also featured in the losses, according to the report, although the figures were not itemized in detail in the summary seen by this newsroom. Here again, procurement rules require clear justifications, budgets, approvals, and a transparent audit trail. Without that, even legitimate expenses look suspect.
So what happens next? Auditor General reports usually go before Parliament’s oversight committees for hearings and directives. Lawmakers can summon the fund’s leadership, ask for documentation, and order corrective action. The Ethics and Anti-Corruption Commission can open inquiries where criminal or graft elements are suspected. The Directorate of Criminal Investigations may also step in if there are grounds for fraud or theft.
For contributors, the key questions are simple. Can the fund recover any of the money? Will there be changes in how investments are approved? Will idle properties be leased, sold, or redeveloped? Will procurement be locked down to stop cash purchases and inflated items? Those answers determine whether confidence stabilizes or erodes further.
Recovery paths exist but are hard. For bond losses, the money is likely gone unless trades were unlawful, in which case civil or criminal recovery is possible. For the overpaid tax, refunds or offsets can be pursued if KRA confirms the position and documentation is solid. For the Upper Hill land, the outcome rests with the courts. For idle buildings, turning them around needs a clear asset strategy, budgets for refurbishment, and credible tenants.
Governance will be under the microscope. The NSSF’s Board of Trustees and management team are expected to show they followed the investment policy and procurement law—or explain where and why they deviated. Strong internal audit, a vigilant audit committee, and real-time monitoring are not nice-to-haves in a pension fund; they are the guardrails that protect members’ savings.
The scale of the reported losses also comes at a sensitive time. Worker contributions have been rising under recent reforms, and many employers have tightened costs in a tough economy. When people contribute more, they expect cleaner books and better returns, not headlines about Sh2 million reception desks and Sh12 billion trading missteps.
There are actionable fixes. Tighten investment approvals and set hard limits for premium bond purchases. Track mark-to-market risks and require side-by-side comparisons of yield versus capital loss before trades are cleared. Publish quarterly dashboards on asset performance and utilization. Enforce e-procurement end-to-end and ban cash payments except for legally defined petty cash thresholds with receipts. Ring-fence refunds and recoveries with timelines and public updates.
Finally, communicate clearly with contributors. Silence breeds speculation. A short plan with milestones—tax recovery progress, status of the court case on the land, roadmap for idle buildings, and a procurement cleanup—would help rebuild trust. Oversight works best when the people paying into the fund can see, in plain language, how their money is being protected.
Why this audit matters for workers and markets
Pension funds anchor the financial system. They buy government securities, lend stability to markets, and fund real estate and infrastructure. When their controls weaken, the effects ripple out: more volatile investment flows, lower returns for retirees, and less confidence among employers and workers who contribute every month.
The Auditor General’s report sends a clear warning: fix the basics. Make investments boring again—safe, long-term, and well-documented. Keep procurement clean and traceable. Put assets to work or move them on. And where money was lost or wrongly paid, chase it with urgency. This is not just about numbers on a page; it’s about the dignity of retirement for millions who did their part and expect the fund to do the same.
- Sep 9, 2025
- SIYABONGA SOKHELA
- 19 Comments
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Shelby Mitchell
September 10, 2025 AT 08:14Not even sure what to say after that.
mona panda
September 10, 2025 AT 18:20Evangeline Ronson
September 10, 2025 AT 22:05Cate Shaner
September 11, 2025 AT 16:13Thomas Capriola
September 11, 2025 AT 18:13Rachael Blandin de Chalain
September 12, 2025 AT 15:15Soumya Dave
September 13, 2025 AT 14:23Chris Schill
September 13, 2025 AT 16:16cimberleigh pheasey
September 14, 2025 AT 03:57Tom Gin
September 14, 2025 AT 08:49Someone’s got a new yacht. Someone’s got a new island. Someone’s got a new life.
And the rest of us? We’re just hoping our pensions don’t vanish into thin air.
It’s not a scandal. It’s a farce. And we’re all the punchline.
Alex Alevy
September 14, 2025 AT 21:58Aileen Amor
September 15, 2025 AT 02:59Danica Tamura
September 15, 2025 AT 13:53William H
September 15, 2025 AT 22:29Katelyn Tamilio
September 16, 2025 AT 03:57But I also believe in second chances. Let’s make sure the new board has real accountability. Maybe we can start a community petition? I’d sign it. And I’ll help draft it.
Michael Klamm
September 16, 2025 AT 14:04Shirley Kaufman
September 17, 2025 AT 02:14christian lassen
September 17, 2025 AT 07:54Jack Fiore
September 17, 2025 AT 17:07