Retirees failed to claim Sh166.83 million in benefits due from the National Social Security Fund (NSSF) by the end of June 2022, the Auditor-General has revealed, with the fund coming under the spotlight over failure to remit the funds to the unclaimed assets authority.
The unclaimed benefits were part of accrued payments of Sh3.6 billion at the end of the period, which the State-owned pension fund continually pays out to retirees at the end of their working days.
Part of these payables remain unclaimed due to a variety of reasons, which can include the death of claimants and ignorance by qualifying claimants.
Most of the unclaimed assets in Kenya are attributed to the failure of owners who die intestate and those who failed to inform beneficiaries of the property.
A baseline survey commissioned in 2018 estimated that Sh241 billion in unclaimed financial assets was still unreported to Ufaa by public agencies and private firms.
“The statement of net assets available for benefits reflects payables and accruals balance of Sh3.59 billion. The balance includes returned benefits of Sh166.83 million for unclaimed member benefits that have been outstanding for a long period of time and were not submitted to the Unclaimed Financial Assets Authority (UFAA),” said the Auditor-General in a report on NSSF’s financial performance.
“This was contrary to Section 20 (1) and 22 of the UFAA Act of 2011 that requires a person holding assets presumed abandoned and subject to the custody of the authority as unclaimed assets under this Act should make a report and at the time of filing the report pay or deliver to, or hold to the order of the authority all abandoned assets.”
The law requires the holding company to search for the rightful owners of an asset before declaring it unclaimed and forwarding it to the Ufaa.
It also allows the Ufaa to charge any entity that fails to surrender unclaimed assets a penalty equivalent to 25 per cent of the assets held. Besides, the authority levies a penalty of between Sh7,000 and Sh50,000 for each day that the assets stayed before being submitted.
UFAA had, however, offered— via the 2022 Finance Act— a one-year waiver of penalties running until the end of June 2023, hoping to encourage surrenders by companies that were otherwise put off by the prospect of stiff penalties and interest charges.
Due to the moratorium, the value of surrendered unclaimed assets rose to Sh57.5 billion as of December 2022 from Sh48.4 billion at the end of June last year.
The assets included Sh27.3 billion in cash, 1.2 billion units of shares valued at Sh30.17 billion, 9.1 million units of trust funds and 3,661 safe deposit boxes.
