NSSF members to get Shs1.1 trillion interest

Finance minister Matia Kasaija (left) and NSSF managing director Richard Byarugaba during the Fund’s annual members meeting in Kampala yesterday. PHOTO/KELVIN ATUHAIRE

By MARTIN LUTHER OKETCH

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The National Social Security Fund (NSSF) on Monday announced it will pay Shs1.14 trillion in interest to its members after confirming 10.75 per cent interest on their savings for Financial Year 2019/20.

Statistics at NSSF show that member contributions increased by only 5 per cent from Shs1.22 trillion to Shs1.28 trillion. The marginal growth is attributed to the amnesty NSSF offered to businesses that were affected by Covid-19 pandemic. In the result, NSSF deferred a total of about Shs22 billion in collections.

“This rate of 10.75 per cent I have declared today is higher than 6.2 per cent -- the 10-year average rate of inflation. In summary, the Fund has paid you a real return – eliminating the risk of erosion of the value of your saving as a result of inflation and growing the savings in real terms. I would like to applaud the board and management for ensuring that members’ savings are preserved,” Finance minister Matia Kasaija said during the declaration of the interest rate at Kampala Serena Hotel yesterday.

“This performance translates into good news for the member. I, therefore, want to congratulate the NSSF team upon delivering a remarkable performance for the Financial Year 2019/2020 in spite of the challenging macro environment,” Mr Kasaija added.

In the 2017/18 financial year, NSSF paid the highest interest rate of 15 per cent and followed it up with 11 per cent last year.

Mr Kasaija said the Fund’s assets grew by 17 per cent from Shs11.3 trillion to Shs13.28 trillion, while total revenue increased by 14.7 per cent from Shs1.254 trillion in 2018/2019 to Shs1.47 trillion in 2019/20.

Speaking about the NSSF Amendment Bill before Parliament, Mr Kasaija said: “This Bill is good for the members as it will usher in the much-desired flexibility to provide additional benefits. It will also expand social security coverage. Currently, only two million out of 16 million of Uganda’s working population have social security coverage of any form,” he said. The minister added: “The Bill will, therefore, address this gap by making it mandatory for all employers, including those who are employing less than five people, to remit social security contributions for their workers. The Bill will also spur economic development by increasing the ratio of savings to GDP, which is critical for economic development.”

Impact of Covid-19 
The Covid-19 pandemic has ravaged global economies and severely affected countries. However, Mr Kasaija said government did its best to contain the pandemic and as a result, Uganda has been named among the top 10 countries globally who have contained the virus.

“But our economy did not escape the effects of the lockdown,” he observed.
Mr Kasaija said Uganda’s economy shrank by 3.2 per cent in the second quarter of 2020 and the economic growth rates have been revised to between 3.0 and 4.0 per cent, contrary to the initial projections of 5.4 per cent growth rate.

“Growths in various sectors were minimal with industry growing by a minimal 2.3 per cent, services 3.6 per cent and agriculture 4.2 per cent. The economic slowdown had a ripple effect on the Fund’s business, especially contributions from members,” he said.

Mr Kasaija said saving in Uganda is still very low. He said the level of saving stood at 21.2 per cent in 2019.

“If the level of saving was at 50 per cent to GDP, we would not be borrowing so much. We would be using our money to finance projects,” he said.
The NSSF managing director, Mr Richard Byarugaba, said the Fund’s asset worth is Shs13.1 trillion.

“This asset allocation has helped the Fund through the turbulent times in the financial markets; 78 per cent of the members fund is held in fixed, predictable, high-yield bonds. The Fund has sufficient assets to cover its liabilities. It is solvent. Despite the turbulent environment, we remain on course to deliver our long-term strategic goals,” he said.

Mr Byarugaba said the Shs20 trillion target is in sight in their management of the Fund.

The board chairperson, Mr Patrick Byabakama, said this is the 10th year that NSSF has been given a clean bill by the Auditor General, which is proof of good corporate governance.

“Over the last 12 months, we have also continued to exercise our fiduciary role to ensure the Fund fulfils its mandate as spelt out in the NSSF Act 1985, which is summarised into three key areas, which the MD [managing director] has touched on,” he said.

Mr Byabakama added: “Investing the collections judiciously in order to preserve members’ funds; interest allocation increased by 18 per cent to Shs 1.14 trillion from Shs967 billion in 2018/2019. Paying out benefits to qualifying members; Benefits paid grew by 10 per cent to Shs496 billion from 449 billion in 2018/2019.”