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newvision
By David Mugabe
Construction works of the NSSF new designed sh260 billion pensions tower
will commence in August 2012 after full evaluation of the three final
bidding Chinese companies and works are expected to end in August 2015.
"It will be an ultra-modern an intelligent building comprising 3
towers," said Richard Byarugaba, NSSF chief adding that the total cost
will be about sh260 billion while the tallest tower will have 25 stories
making it the tallest building in Kampala.
Works stalled of the pacecraft shaped structure in 2008. Later, Roko
Construction Company built the first phase which included construction
of four basement levels. But Byarugaba said that Roko that bided to
handle the second stage did not qualify.
Byarugaba said the design was changed because NSSF acquired additional
land totaling three plots (75,000 square metres) and therefore they had
to use the land optimally.
The three final Chinese being evaluated are Sinohydo Corporation, China
National Aero-Technology International Engineering Corporation and China
Civil Engineering. In total 17 companies bidded for the works including
some local Ugandan companies.
Questions however remain on the opportunity and capacity of Ugandan
companies to undertake such projects which would have huge spin-offs for
the citizenry given that most of the money would be kept in Uganda
besides building local capacity.
The first and second towers will have 10 storeys while the third will
have 25 storeys and will have four basements with the capacity to pack
500 vehicles.
Workers, according to Byarugaba should expect to earn a 15% annual
return from the new designed sh260 billion pensions tower building once
completed, the National Social Security Fund (NSSF) chief said.
The project is part of the fund's real estate investment project. NSSF
also invests in fixed income, treasury bills and bonds and equity. The
fund is worth over sh2.5 trillion.
By Ibrahim Kasita
AFTER years of indecision, Uganda has finally taken action to
open-up the pension sector. The move is expected to unlock funds needed
for long-term investments.
The Uganda Retirement Benefits Authority Bill 2010 will establish an
independent regulator to manage and operate the retirement benefits
schemes.
It also intends to establish a comprehensive legal and regulatory framework for the sector.
“This is a positive step because the regulator is a vehicle to
push for more reforms,†Kenneth Kitariko, the head of African
Alliance, said.
Currently, workers and employers make mandatory monthly payments to
the National Social Security Fund (NSSF), which they access on attaining
55 years.
“More reforms are expected to follow when the Bill is passed into law,†Kitariko said.
Among the anticipated reforms is the shift of NSSF away from being a
provident fund – with beneficiaries being paid a lump sum on
retirement, to a pension fund, where the contributors receive monthly
payments for the rest of their life.
Reforming the pension sector is critical for competition and growth
as it provides a key avenue for increasing access to long-term finance
through increased mobilisation of savings.
“The law is very good for us workers. We shall get value for money
because of the competitive rates offered by various service
providers,†Felix Osike, a journalist, said.
“Our money has been mismanaged and there is no guarantee of
getting our benefits. I think liberalising the pension sector will
provide hope for workers,†said Ann Turinayo, an employee.
The Bill will end NSSF monopoly. It is also expected to improve
service delivery. It will separate the duties of the employers, the
trustees, the fund managers and the custodian.
“But essentially the Bill creates a possibility of the employees
to contribute to more than two schemes,†Kitariko explains. Other
anticipated changes include amending legislation to expand social
security coverage to stimulate financial markets. This kind of
legislation has already been enacted in Kenya and Mauritius, encouraging
private sector pension provision though incentives.
“Streamlining the regulatory framework for the pension industry
will ensure efficiency in management and investment of pension funds and
this will provide incentives for saving mobilisation,†Gerard
Mbalire, the Institute of Certified Public Accountants of Uganda chief,
said.
“It will be critical to increase awareness and sensitisation on
social security reforms as well as structuring of mandatory and
voluntary savings.â€
Experts argue that individual retirement benefits schemes have
proved to be a promising window for savings for retirement to a
cross-section of the population.
They provide convenient opportunities for self- employed
professionals, workers in the formal sector, and employees in formal
employment setups where employers opt not set up company schemes and
also those already contributing to a scheme but who wish to make
voluntary contributions.
However, the liberalisation of the pension sector will entail
provision of stringent provisions to protect beneficiary savings against
fraudulent fund managers and unfair competition. This means the pension
schemes have to prepare annual audited financial statements, drafting
of a trust deed and rules document in accordance with regulations,
remitting contributions and paying benefits within set times and
reporting to the regulator.
It is, however, not clear whether the existing contributors to NSSF could change to other profitable pension schemes.
“There will be a question of liquidity because NSSF has invested a
lot money buying shares, housing and land projects,†Mbalire argued.
“I am not sure whether NSSF will allow its members to pullout. May
be members could leave the scheme but the contributions will be settled
later.â€
NSSF, with about 400,000 members, is mandated to collect member
contributions, invest them and pay commensurate benefits to qualifying
members.
This makes it a provident fund not a pension fund since no early withdrawals of member balances are allowed.
Uganda’s formal social security was set up in 1968 to provide retirement benefits to people who retire from active service.
By Cyprian Musoke
and Joyce Namutebi
THE National Social Security Fund (NSSF) has opposed the total
liberalisation of the pensions sector, saying there was still need for a
mandatory government retirement benefits scheme for all employees.
In their submissions to Parliament over the Retirement Benefits
Authority Bill currently before the House, the NSSF board argued that
there was need for sufficient state safeguards which private schemes
lack.
The Bill seeks to liberalise the pensions sector by providing for a
regulatory authority that will oversee the private players. It obliges
employers to pay contributions for their employees into any scheme
licensed under the Act.
It also obliges all existing retirement benefit schemes (including
NSSF) to apply to the Authority for a license within three months of the
coming into force of the Act.
“The fund (NSSF) strongly supports the initiative to establish a
regulatory authority for the retirement benefits sector. Our concern is
that the Bill removes the fund’s statutory monopoly without adequate
provision for a smooth transition to liberalisation.
In our view, this will lead to confusion, anarchy and poses risks
for the workers savings,†read a statement signed by board chairman
Vincent Ssekono.
It cites the case of a famous business man, Robert Maxwell of
England, who fraudulently diverted his company’s pension fund to cover
company losses and eventually committed suicide, leaving no recourse
for his employees.
“Recently, the Government of Uganda had to intervene after
National Insurance Corporation failed to pay retirement benefits owed to
Makerere University staff. The presence of a regulator alone does not guarantee the security of people’s savings,†Ssekono said.
They gave the examples of Greenland and the Cooperative Bank that
collapsed with savers money despite the presence of Bank of Uganda, a
regulator.
“The Bill lacks provisions on regulation of transfer of savings by
employees from one scheme to another. This should be explicitly
provided for lest the sector runs the risks of a run from one scheme to
another,†Ssekono said.
Ssekono argued that the Bill empowers the Authority to revoke the
license of a retirement benefits scheme including NSSF, yet the NSSF Act
says its statutory mandate to operate cannot be revoked by a regulator.
The Bill, Ssekono argued, should be simultaneously debated with
amendments to the NSSF Act to address all cross cutting and transitional
issues affecting NSSF.
He expressed concern that NSSF shall be required to compete with
other licensed schemes, yet its range of benefits is limited by the NSSF
Act to five age, withdrawal, invalidity, emigration and survivors
benefit.
Ssekono also complained that they, as key players, were not
consulted prior to formulation of and presentation of the Bill to
Parliament.
By Vision Reporter
THE National Social Security Fund (NSSF) board is satisfied with the
progress on the construction works of its Pension Towers in Nakasero.
“As a board, we are happy with the speed and quality of the work executed.
We are satisfied and impressed by the design and quality of the
work,†Vincent Ssekonno, the board chairman, said during an appraisal
tour of the project recently.
Henry Ssentoogo, the lead consultant, said the project will boost
the supply of modern commercial rental space once complete. The demand
for rental space is growing, but with limited supply.
“Low investment in the sector is responsible for the high rental
rates in Kampala and if left unabated, will be a disincentive to
investors coming to do business in Uganda,†Ssentoogo noted.
He pointed out that modern commercial office space will encourage investors into the country.
Ssentoogo said the Pension Towers will bring onto the market what will be Uganda’s “most modern building in the city.â€
The gigantic structure initiated in 2000 is promising to add colour to Kampala’s skyline.
The three-tower building will provide 59,413 square metres of office space.
One tower will have 25 floors, while two others will have eight floors each.
It will also have four basements with parking capacity for 500 cars.
It will also have two podium levels for shopping malls, restaurants and conference facilities.
Ssentoogo said the space in Pension Towers will be equivalent to
Crested Towers, Uganda House, Sheraton Hotel and Charm Towers combined.
Workers House, also owned by NSSF, has 15,000 square metres of office
space and accommodates 150 cars in its parking space.
“In a lay man’s terms, there are four Workers Houses in the Pension Towers project,†said Ssekoono.
The board also inspected civil works in the upmarket residential
area of Mbuya Hill where the fund is constructing six luxury apartments.
The apartments will be ready for sale in July.
The second phase of the project with 16 units of apartments in the same area will commence in October.
Ssekoono said NSSF will also build 3,000 housing units for middle-and-high income earners on its 563 acres of land in Lubowa.
He said plans were underway to build another 5,000 housing units in Temangalo starting in 2012.
By John Semakula
The Government of Uganda has embarked on the process of constituting a
minimum wage board to ensure Ugandans get rational salaries from
employers.
State Minister for Labour Mwesigwa Rukuntana said the board is being
constituted to give the Government advice on how to fix the minimum wage
and when to do it.
“The board will tell the Government whether Uganda is now ready for
fixing the minimum wage and which sectors should embrace it first,”
Mwesigwa said.
Rukuntana added that his Ministry has already drafted the policy on the
matter and that it will soon be tabled before Cabinet and if endorsed
sent to Parliament.
He made the remarks on Wednesday while officiating at the closing of a
two-day training workshop for domestic workers’ recruitment agents at
Emerald Hotel, Kampala.
The training organised by Platform for Labour Action a local NGO aimed
at equipping participants with knowledge on protecting the rights and
freedoms of domestic workers.
Rukuntana said the National Resistance Movement (NRM) Government would
have already fixed a minimum wage but had a chain of reservations then.
“We never wanted to jump into fixing the minimum wage and scare away investors and the already existing jobs,” he noted.
“If you fix a minimum wage and there are no jobs, then you have a law
that will remain on paper because the employers and employees will
reject it.”
He advised Ugandans who feel exploited by the employers before the
minimum wage is fixed to run away from the jobs and look for better one.
The Minister also disclosed that the Government is in the process of
ratifying the International Labour Organization (ILO) on the standards
of domestic workers.
Rukuntana noted that the rights and freedoms of domestic workers in
Uganda have always been violated by their employers yet with little
legal help.
He said like any other employees, domestic workers are entitled to
annual leave, social security, pension and training to be able to
survive on their own when they are old.
SIR — I read your
Monday article “Government reviews NSSF scheme†with my heart in my
mouth. The finance minister, Ezra Suruma says that when people get money
in a lumpsum they try business which they have never done and fail
because they have been civil servants all their lives.
My experience is that not all civil servants die in civil service. I
know many who have abandoned civil service for a more serious business
— politics and are doing extremely well.
In short let the people do what they want with their money. If the
Government were really concerned about the citizens’ social security
we would have a different story to tell about the plight of pensioners
today.
There are many examples of Ugandans who have worked diligently for
the government and retired honourably but have died like paupers
without earning a single shilling from their pension. Why is that?
Then there are blatant examples of political patronage where a few
privileged people are given free money and medical treatment abroad on
top of their fat salaries because they belong to the “right sideâ€
while other people die of preventable diseases! Ugandans will not forget
in a hurry the sh5m given to the NRM MPs for “facilitationâ€.
They will not also forget the sh2.5b given to Specioza Kazibwe nor
the sh30b which was spent on a referendum that was absolutely
unnecessary. Those are just a few examples but they are enough to
illustrate the fact that “social security†for the majority of
Ugandans is not an urgent matter for the government in the present
scheme of things.
But the most interesting issue is where all this money comes from! I
vividly remember an article the New Vision published about two or three
years ago about a pensioner called James Bizarwenda, 81 who had worked
as a telephone operator as a blind man for 22 years in Fort Portal and
had never received a single coin 10 years after retirement.
I know Bizarwenda has not been paid to this day! Is that the
Government’s idea of social security? On a conservative estimate, NSSF
has more than sh450b today and it is compulsory for big employers to
contribute 10 per cent of every employee’s salary while the employee
contributes 5 per cent.
What is interesting is that the interest this money accrues is
always below inflation rate but still NSSF cannot be liberalised like
all the other government businesses! Why? We do not need Adam Smith to
tell us that a shilling today is better than a shilling tomorrow.
If social security was really the intention of the Government why
can’t NSSF be liberalised and employees allowed to contribute to a
pension scheme that makes more economic sense?
Yes, the Government can compel employers and employees to plan for
“social security†and make it criminal not to do so but should not
dictate that they must contribute to NSSF which is so shamelessly
exploitative.
Why should people suffer the prohibitive interests of commercial
banks when they need loans while the Government is sitting on their
billions?
For one to benefit from one’s NSSF savings, one must be 55 years
old or must have been jobless for at least two years! In traditional
civil service, the retirement age even goes up to 60 years.
This benefits the government rather than the employee because the
government can relax for as long as possible before paying pension which
is an employee’s right. Inflation and taxes gobble up most of our
money and therefore it is better to get our money in a lumpsum and see
what best we can do with it.
Not everybody is a fool! In 1987, people lost a lot of money when
the Government knocked two zeros from every figure and reduced
everybody’s money by 30 percent.
Therefore, Ugandans are not strangers to suffering as a result of
exploitative government policies. Give us our hard-earned money and we
will know how best to invest it because there is no evidence that the
Government is bothered about the social security of her citizens.
It is only the blue-eyed boys and girls who can live without
sweating who enjoy social security. We are better off putting our money
in assets than being fooled with a “pension†where our currency is
lighter than a feather.
NSSF money should not be treated as free money controlled by
draconian laws which benefit everybody else except the lawful
beneficiaries who must first go through hell before they can be given
their alms. For crying out loud, are there no laws in this country
governing public finance?
Aaron Ayebare
Kampala
EDITOR:
I have been following discussions on the proposal to turn workers'
savings in the National Social Security Fund (NSSF) into a pension
scheme. I cannot stop asking whoever is behind this irrational proposal a
number of questions.
Most of us who save with NSSF have big ambitions of investing and
living a good life but the bogus proposal would deny us the opportunity
to acquire mortgages and low interest loans to invest while NSSF uses
our savings as collateral!
Is it a scheme to impoverish every Ugandan? It is claimed that many
people misuse their savings given to them at retirement. Who is to
decide how people should use their own money?
How often has the Government asked people for their monthly income to invest it for them or ration it for their spending?
What makes the Government think a person who has worked for all
those years lacks the wisdom to manage their own savings? What yardstick
is used to conclude that some people have misused their savings? And
why should the Government be bothered?
If the Government has failed to manage the pension scheme for civil
servants, what moral authority does it have to even utter a word about
workers' savings in NSSF? The Government should convince us that it is
not after promoting wretchedness through this myopic scheme.
D. Agaba
Kampala
