Munyes appoints Odongo to head NSSF

Tom Odongo has been appointed as the managing trustee of the National Social Security Fund (NSSF). Photo/FILE  NATION MEDIA GROUP

By Mugambi Mutegi

In Summary

• Mr Odongo, who has held the position in an acting capacity for 10 months, has a three-year tenure effective from Wednesday, according to a notice in the November 27, 2012 edition of the Kenya Gazette.
• Mr Odongo’s appointment brings to an end the search for a manager of the Sh100 billion fund that has been without a substantive chief executive since the exit of Mr Kazongo in February, over claims of incompetence.
• The NSSF board of trustees picked Mr Odongo ahead of David Bonyi, the company secretary at the Retirement Benefits Authority (RBA) and Kennedy Odondi, the principal officer at Africa Development Bank (AfDB).

Labour minister John Munyes has appointed Tom Odongo as managing trustee of the National Social Security Fund (NSSF).

Mr Odongo, who has held the position in an acting capacity for 10 months, has a three-year tenure effective from Wednesday, according to a notice in the November 27, 2012 edition of the Kenya Gazette.

“The Minister of Labour appoints Tom Otieno Odongo to be a member of the board and a managing trustee of the NSSF for a period of three years, with effect from November 28 2012,” the notice says. “The appointment of Alex Odero Kazongo is revoked.”

Mr Odongo’s appointment brings to an end the search for a manager of the Sh100 billion fund that has been without a substantive chief executive since the exit of Mr Kazongo in February, over claims of incompetence.

READ: Kazongo pays the price for Portland row

Mr Odongo takes charge at a time when the fund is in a transition, including an ongoing conversion from a providence fund into a pension scheme.

The NSSF board of trustees picked Mr Odongo ahead of David Bonyi, the company secretary at the Retirement Benefits Authority (RBA) and Kennedy Odondi, the principal officer at Africa Development Bank (AfDB).

It forwarded the three names after a process that was partly conducted by a professional recruitment firm.

READ: Munyes set to appoint NSSF boss after board interviews

An NSSF board member told the Business Daily that Mr Odongo scored higher marks than his rivals during the oral interviews and that the decision to pick him “was based on merit.”

“Mr Odongo scored over 80 points out of a possible 100 while the other two candidates had 60 points on average,” the source said.

This is the first time that the NSSF board has had a direct role in selecting its chief executive, all past bosses having been presidential appointees.

That method of appointment was seen to undermine professional running of the fund as it invited political lobbying and meddling that exposed the agency to high levels of corruption.

Sensitive institution

“NSSF is a very sensitive institution and there is a lot of stakeholder and political interest in the office of the managing trustee,” Mr Odongo told the Business Daily in an earlier interview.

“The fund of yesteryears was politically-driven and the managing trustee was appointed by the President and the minister and his allegiance was to the two as opposed to members.”

Mr Odongo’s principal task will be managing the reforms aimed at establishing professionalism at the NSSF, eliminating corruption and increasing returns to membership.

The NSSF Bill, 2012, which got Cabinet approval last week, is being touted as the solution to most of the fund’s problems.

The Bill proposes extended benefits for its 4.2 million members, including the transfer of benefits across EAC member states, recruiting the unemployed into the membership as well as payment of funeral and maternal grants. Members will also receive out of work support for six months.

READ: Cabinet approves Bill to convert NSSF into pension scheme

For this, monthly contributions will increase from the current maximum of Sh400 per month to six per cent of gross salary.

Formal sector workers’ monthly contribution to NSSF is split equally between employers and employees totalling Sh400.

The new Bill also includes punitive measures against employees of the fund who defraud it and for employers who fail to remit workers’ contributions. Such employers will be liable to a jail term of up to three years, a Sh200,000 fine or both.

“The fund will provide basic social security to all workers in the formal sector and an opportunity for the same for those in the informal sector who volunteer to join the scheme,” the Cabinet brief read in part.

NSSF contributions rose marginally in the last financial year to Sh6.8 billion from Sh6.7 billion at the end of June 2011. This was the lowest year on year growth recorded in the past four years.

NSSF’s pay-out to its membership also dropped to Sh1.7 billion from Sh2.2 billion in 2011, raising the fund’s net build-up of savings to Sh5 billion from Sh4.5 billion in 2011.

Mr Odongo will also be tasked with bringing down the fund’s administrative costs.

“We are spending about five per cent of total assets on administrative costs which is pretty high,” he said. “Under the new Bill, the fund and the board cannot spend more than 2.5 per cent of total assets on administrative costs.”

NSSF is also in talks with the City Council of Nairobi to redeem municipal stocks worth Sh1.1 billion that it bought from the local authority between 1975 and 1985.

The provident fund has classified the debt as a doubtful investment that it may not recover but NSSF recently said it was engaged in ‘‘high level consultations’’ with the council with a view to settling the matter.