By Racheal Nagawa | Senior Reporter, Business Express
National Social Security Fund (NSSF) is entangled in dozens of court cases and arbitration proceedings involving tens of billions of shillings, even as the state pension fund posted a significant expansion in its asset base for the financial year ended June 2025.
According to its latest audited financial statements, NSSF’s total assets rose sharply to KSh 575.1 billion, up from KSh 402.2 billion the previous year. The growth was largely driven by increased allocations to government securities, Eurobonds, and listed equities.
However, beneath the headline growth lies a complex web of unresolved disputes—many dating back more than a decade—whose financial implications could materially affect the fund’s long-term stability. With member liabilities standing at KSh 572.8 billion, nearly matching total assets, the margin for error remains thin.
Billions in Contingent Assets
Among the largest unrecognized claims is KSh 11.62 billion in contribution penalties owed by employers who remitted statutory payments late. The fund has not recorded the amount in its books, citing uncertainty around recovery timelines. Ongoing efforts include court proceedings, alternative dispute resolution, and intergovernmental engagement, particularly concerning defunct local authorities.
In a clearer case of receivables, NSSF is owed KSh 904.9 million by the Kenya Revenue Authority following a 2016 High Court judgment. Although the tax authority has acknowledged the refund, payment had not been received as of the reporting date.
Additional contingent assets include historical investment exposures such as Discount Securities shares valued at over KSh 1.2 billion—where criminal proceedings have concluded and recovery is ongoing—and partial recoveries from the collapse of Euro Bank.
Persistent Land Disputes
Land-related litigation remains a recurring theme in the fund’s legal battles. NSSF continues to contest title revocations involving parcels in gazetted areas, including land in Karura and Ngong forests valued at approximately KSh 965 million combined.
In Mlolongo, the fund has appealed the cancellation of title to land valued at KSh 27 million, currently hosting a government weighbridge. Meanwhile, in Mombasa, ownership of Hazina Plaza—a commercial property acquired for KSh 450 million—is being challenged in a complex leasehold dispute involving original lessors and sub-lessees.
Such cases not only tie up capital but also raise questions about historical land acquisition processes and compliance frameworks.
Construction Claims Pose Major Risk
On the liabilities side, construction-related disputes present the most significant financial exposure.
Contractor Mugoya Construction is pursuing claims of KSh 7.06 billion linked to the stalled Nyayo Embakasi Phase Six housing project, while NSSF has counterclaimed KSh 9.87 billion. The matter remains under arbitration.
Another high-stakes case involves Centurion Engineers over refurbishment works at Social Security House in Nairobi. Claims escalated from hundreds of millions to potentially billions of shillings before hearings closed in mid-2025. An arbitral award is pending.
Tenant disputes further add to the fund’s legal burden. Nakumatt Holdings is seeking KSh 2.2 billion in damages, alleging business disruption at Hazina Trade Centre. NSSF has counterclaimed for unpaid rent and associated losses.
Additional cases range from employment disputes and professional fee claims to indemnity suits and historic land sale disagreements. Some are before the Court of Appeal and Supreme Court, extending uncertainty over final outcomes.
Portfolio Composition and Liquidity Position
Despite the legal overhang, NSSF’s investment portfolio remains heavily weighted toward government instruments. Treasury bonds account for KSh 355.4 billion—approximately 62% of total assets—while quoted equities stand at KSh 85.1 billion and Eurobonds at KSh 34.3 billion. Cash holdings of KSh 3.6 billion represent less than 1% of the portfolio.
The concentration in government securities reflects a conservative allocation strategy aimed at capital preservation. However, limited liquidity buffers may constrain flexibility should significant adverse rulings arise.
Governance and Risk Implications
The scale and longevity of NSSF’s disputes underscore broader governance and risk management challenges within Kenya’s public institutions. While contingent assets could provide upside if successfully recovered, contingent liabilities—particularly in construction arbitration—pose meaningful downside risks.
For contributors, the stakes are high. As a mandatory pension scheme, NSSF safeguards the retirement savings of millions of Kenyan workers. Ensuring asset security and minimizing litigation exposure will be critical to sustaining confidence in the fund.
As cases progress through courts and arbitration panels, the financial and reputational impact on Kenya’s largest pension scheme will remain under close scrutiny from regulators, contributors, and capital markets alike.
About the Author
Racheal Nagawa is the Senior Reporter at Business Express Magazine, specializing in macroeconomics, capital markets, public finance, and regulatory affairs. She provides in-depth analysis on financial governance and investment trends shaping East Africa’s economic landscape. This article originally appeared on SA Varsity News
