The National Social Security Fund (NSSF) has declared an 11.23% interest rate for the Financial Year 2012/2013, in line with its renewed commitment to deliver a competitive return to members.
This is an increase from 10% rate paid to NSSF members in the previous Financial Year. Over 1.3 million contributors to the Fund will therefore earn a total of UGX 278 billion compared to UGX 202 billion that was paid out last year. The rate will be calculated and credited on the balance on the members’ accounts as of 1st July 2012.
Announcing the interest rate at a media briefing in Kampala, the Minister of State for Finance, Planning and Economic Development Hon. Matia Kasaija, who represented the Minister for Finance, Hon. Maria Kiwanuka, attributed the improved performance to the Fund’s strategic exploitation of the investment environment.
NSSF Managing Director Richard Byarugaba said that the last three years have seen the Fund grow in all dimensions. “This year, the engine of growth has been the improved compliance which now stands at 72% and prudent but aggressive investment which has led to higher revenues. Our efficiency led to better cost management.”
“Our cost income ratio is at 16%, better than 55% of the banking industry average and our cost of administration is at 2.0% better than most global funds of similar size like ours,” he said.
NSSF Board Chairman Ivan Kyayonka said that although the small size of the market and limited investment opportunities presented a challenge, the Fund was able to register significant progress and attained commendable results compared to the previous year.
He singled out the Fund’s earnings from its participation in the Umeme IPO. NSSF earned Ugx 13 billion from our investment in Umeme – Ugx 2 billion dividend and Ugx 11 billion in capital gains.
“The Fund is strong, stable and secure. Our cardinal responsibility is to ensure that the funds are invested in projects that give a good return to our members,” he added.
Commenting on the issue of impact inflation, Byarugaba said that the Fund aims at growing the value of members’ savings by ensuring that it pays interest rate which is above 10 year rate of inflation.
“Our focus is to provide a reasonable return to members, without compromising the safety of their savings, therefore, in the long term the Fund must preserve member funds. Our 2013 rate of 11.23% is 2% above the 10 year inflation rate of 9.23%. The Fund does preserve the value of member funds,” he added.
Summary of NSSF Performance for Financial Year 2012/2013
• Assets grew from by 27% from UGX 2.7 trillion in Financial Year 2011/2012 to UGX 3.5 trillion in Financial Year 2012/13.
• Contributions grew by 18% from UGX 472 billion in Financial Year 2011/2012 to UGX558 billion, powered by compliance level of 72%
• Amount of interest credited on members accounts has increases by 38% from UGX 202 billion in Financial Year 2011/2012 to UGX 278 billion in the Financial Year 2012/2013.
• NSSF 2013 rate of 11.23% is above the 10 year inflation rate of 9.23
• Benefits paid to members grew by 39% from UGX 101 billion in the Financial Year 2011/2012 to UGX 140 billion Financial Year 2012/13.
• Turnaround time for payment of benefits improved from 44 days in Financial Year 2011/2012 to 10 days Financial Year 2012/13.
• The cost to income ratio is now at 16%, better than 55% of the banking industry average
• Cost of administration is at 2.0% better than most global funds of similar size