Kampala | RedPepper Digital – The Managing Director of the National Social Security Fund (NSSF) Richard Byarugaba has said that the fund is not systematically prepared to pay out the 20% mid-term access benefit to its members who have saved for 10 years and are 45years and above as per the provisions in the NSSF amendment bill
“The truth of the matter is that if we were asked today to pay qualifying members who have saved for ten years and have attained the age of forty-five (45) and above, our current system will not be able to do it because the system is not elevated to be able to deal with the old benefits we had like age, withdrawal e.t.c,” he said.
He made these statements at the Fund’s headquarters in Kampala on Thursday 23rd September while announcing the FY2020/21 financial performance report.
On when the system will be in place he had this to say: “The good news is that in the month of November we are changing our system. So by the beginning of November once the system is changed we will be able to take on that task.”
On the issue of liquidity of the Fund after the 20% pay-out to members when the President ascents to the bill, Byarugaba said that the fund being a long term investor, they were caught unawares by the new requirements and so they to find new ways of finding the liquidity mechanism to make the payments.
Byarugaba also revealed at the same function that during the Fund managed to register over 150,000 new members and 3,500 new employers have been recruited on the Fund as the economy recovers from the economic shockwaves of COVID-19, and more people getting back to work slowly.
However, he acknowledged that many members fell off and stopped contributing totalling 20% of the total membership of the Fund which he attributes to unemployment and re-employment fluctuations among the members.
It was revealed that Fund’s comprehensive income in the FY2020/21 increased by 25% from UGX1.4T to UGX1.8T despite the effects of the COVID-19 pandemic.
Byarugaba attributed the increase to growth in interest income largely attributed to the increased return on Treasury Bonds in the Fixed Income portfolio, dividend income, and property sales.
He said the performance demonstrates the Fund’s ability to withstand shocks occasioned by a stressed economy and an uncertain business environment in the era of the COVID-19 pandemic.
“The socio-economic effects of the COVID-19 pandemic are still wreaking havoc on economies across the globe, and most businesses may take several years to shake off the effects of COVID-19. Nonetheless, our performance shows that the Fund is not only resilient but can absorb such shocks and continue its growth trajectory,” he said.
Results released by the Fund also show that its Assets Under Management (AUM) increased by 17% from UGX 13.3 trillion to UGX 15.5 trillion as of June 30, 2021, mainly driven by increased contributions and interest income despite an increase in Benefits paid out.
Member contributions increased by 8% from UGX1.27T to UGX1.37T.
Byarugaba said that despite recorded job losses in some sectors of the economy, many employers show encouraging signs of recovery.
“For instance, we saw the recovery of most employers that benefited from the amnesty we offered to businesses that were affected by the COVID-19 pandemic the previous year,” he said.
The amount of money paid out to qualifying members also increased by 29% from UGX 496.4 billion in 2019/20 to UGX 642.3 billion in 2020/21. The growth is attributed to an increase in the number of claimants and the introduction of Invalidity Benefit payments for COVID-19 patients, Byarugaba added.
He also played down expectations of a very high-interest rate but said the Fund will keep its promise to pay a competitive rate, higher than the 10-year average rate of inflation plus 2 percentage points.
Finance Minister Kasaija will announce the new interest rate on members’ savings at the Annual Members Meeting which will take place on 29th September 2021.
Speaking about the NSSF Amendment Bill, Byarugaba said that the Fund is well-positioned to implement the new provisions once they become law.
“We have been preparing over the last one year when it became clearer that the bill would be passed. We have solutions for the changes on the horizon, for instance, mid-term benefits including mid-term access, expansion of coverage to include the informal sector, and expansion of the voluntary space. We have built a very dynamic institution that can adapt, embrace these changes and thrive,” he said.