WTF, NSSF?

Reading the papers these days is an exercise for those who are not faint of heart.

Half of the time you react as follows:

For instance, there is this story of NSSF.

You will react as above if you crunch the numbers from snippets in the story.

Managing Trustee Tom Odongo says the form will cut its payroll further after shedding 315 jobs since April through a voluntary retirement plan.

Further in the story

The fund will save 1.5 billion annually in wages from the first phase of job cuts.

Assuming these savings are from the aforementioned employees, this means that on average the folks being cut pocketed an average of

1,500,000,000 / 315 / 12  = 396,825.40

Every year.

This is not bad money.

Let’s read on

The fund had 1,700 employees in December and its administrative costs in the year to June 2011 stood at 5.2 billion compared to 6.8 billion remitted by workers in the same period.

Let us graph this

Now, if 5.2 is being spent on administrative costs out of the 6.8 billion, this means only 1.6 billion is available for investment

Let us graph this so you can see what that means

In other words, out of every 1,000 shillings Kenyans contribute, 765 go to administrative expenses and only 235 shillings are actually invested.

This invested money by the way is what is meant to pay out your pension.

Just think about that.

So, 76% if our contributions vanish the instant they hit the account.

Amazing.

Let us read on

Employee expenses were more than 2.6 billion

If we couple that with the fact that there are 1,700 employees this means that the average salary at NSSF from cooks can cleaners all the way to the CEO is

2,600,000,000 / 1,700 / 12 = 127,450.98

The average salary at NSSF is 127,450/-

Yezzir.

Remember also that NSSF wants to jack up the contributions to about 12% of your salary.

The band of lucky folks who earn 150,000 and above will pay about 18,000.

Currently you pay 400.

If we graph this

This represents a whopping 4,400% increase

Now, if you fondly believe this will not affect you let me disabuse you of that notion.

The way NSSF works is that you contribute and your employer matches your contribution.

Which means if you have to contribute more, your employer must contribute more.

No additional money has magically appeared in your employer’s coffers.

2 things will necessarily happen.

1. Your net pay is going to go down
2. Since your employer will have to look for more money to pay you, you can consider maintaining your gross salary as your raise for this year.