NSSF in a media statement on 15th October 2020 stated that the fund has money for Mid-term payments but it was shocking to hear Managing Director Richard Byarugaba on Thursday while meeting Members of Parliament on the Gender, Labour, and Social Development Committee saying that the same fund has no money available for lump-sum payments if parliament passes the NSSF Amendment Bill. Payments can only be staggered.
Last month, the Speaker of Parliament, Jacob Oulanyah gave the committee 10 days to scrutinize the National Social Security fund -NSSF Amendment Bill 2021. The 10th parliament passed the NSSF bill allowing for midterm access by savers above 45 years or at least those who have saved for 10 years. However, the NSSF Managing Director, Mr.Richard Byarugaba, didn’t assent to the bill until the expiry of the 10th parliament.
He returned the bill to the speaker, saying parliament needs to amend the commencement date of the Act so that it comes into force on the date of its publication in the gazette.
He also noted that only people above 45 years old and who have saved for over 10 years can access 20 percent of their savings, saying anything else would be unsustainable for the fund. Mr. Byarugaba also disagreed with the proposal in the bill to allow Persons living with disabilities to access up to 75 percent of their savings.
He told the MPs that the fund is unable to pay all their members at a go because all of their money is invested in the East African region.
Mr. Richard Byarugaba disclosed that this year, the fund was planning to pay 932 billion shillings to its members, but if the bill is passed, they will need to pay 1.8 trillion shillings for only this year.
He said that they may need to pay members in a staggered manner prioritizing those in urgent need of the money.
According to Byarugaba NSSF currently has investments in the East African Community including money lent to the government in bonds.
He explained that of NSSF’s total Asset value of 15.6 trillion shillings, 2.7 trillion is invested in the Kenyan bonds, 1.4 trillion in Tanzania Bonds, 7.6 trillion in Uganda, and 28 billion with the Rwandan government.
Members of Parliament questioned if NSSF was in reality a social security fund. They argued that members are struggling to access their savings. Flavia Kalule, the Woman MP Kassanda District, tasked the officials to explain why they do not have enough money and yet members save with the fund every month.
Harold Muhindo the Bukonzo East MP questioned the rationale of the fund giving money to the members when they are incapable of utilizing it especially when they have died or are old.
Florence Asiimwe, the Woman MP Masindi district, says an assessment should be carried out on how many people want to access their money.
Allan Mayanja the MP Nakaseke South said Ugandans are in distress and should access their funds.
Among other proposals in the bill includes employees making additional payments over and above their mandatory contribution, individual contribution to the fund, and the NSSF Board making investment decisions instead of hiring experts.
Both the NSSF boss and Finance Minister Matia Kasaija, have previously opposed mid-term access, arguing that it would drain the Fund and erode interest payable to its members.
The Fund has given savers 12.15 percent above-inflation interest after its income grew by 25 percent to Shs1.8 trillion in the last financial year and its assets base increased from Shs13.3 trillion to Shs15.5 trillion partly on the back of increased contributions from more compliant employers and growing confidence in the Fund.