NSSF board endorses 3% interest rate to members
Oct 03, 2009
THE National Social Security Fund (NSSF) may pay an interest rate of three percent to the fund’s contributors this financial year. Information obtained by Saturday Vision indicates that the new figure, which was agreed upon by the board, has been forwar
By Ben Okiror
THE National Social Security Fund (NSSF) may pay an interest rate of three percent to the fund’s contributors this financial year. Information obtained by Saturday Vision indicates that the new figure, which was agreed upon by the board, has been forwarded to finance minister Syda Bbumba for approval.
According to the NSSF Act, the minister was supposed to declare the interest rate before October 1 in consultation with the fund’s board of directors.
Sources said the minister could raise the interest rate, but that would mean the fund operating in deficit.
In August, the board chairman, Vincent Ssekono, said the workers would not get the 14% interest on their benefits as promised by the previous management. He attributed the change to NSSF losing a sh20b court case against Alcon, the company that had sued the fund for breach of contract on Workers’ House. NSSF has since appealed against the ruling.
NSSF doubled the interest paid to its members in July last year from 7% to 14% for the financial year 2007/08.
This was attributed to the rise in profits made by the fund. That rate was subsequently paid out to members.
However, speculations arose that the rate for the financial year 2008/09 would be much lower.
After the Temangalo land saga, NSSF was asked to suspend investments. Profits from its investments on the stock market slumped as a result of the fall in share prices. For example, the fund has invested in Stanbic shares which were selling at sh230 last year but are currently at sh160.
The new board has criticised the 14% interest that was declared during the David Jamwa administration as exaggerated.
On his part, the chairperson of the National Organisation of Trade Unions, Usher Owere, said: “Jamwa wanted to excite people; what he said was not right.†He, however, disagreed with Ssekono that the Alcon case caused the interest rate to drop.
Concurring with Owere is Lilian Mugerwa, the executive director of Platform for Labour Action, an organisation that coordinates 54 members of the civil society coalition on social security and pension reform.
“The investments made by NSSF can yield a higher interest rate than 2.5%. The abnormal profits that have been made can pay 14%,†said Mugerwa.
She called for the separation of management and policy such that the minister is left to work on policy matters while representatives of employers and employees are elected to sit on the board. This, she said, would enhance accountability.
“That is what we call contributor-centred reforms,†she said. “If members are not satisfied with their representatives, they can recall them. Currently, there is no forum for contributors to get feedback apart from the media.â€
At this moment the minister appoints the board, the managing director, the deputy and other senior officers.
Owere called for the amendment of the act to allow an independent body to appoint the fund’s management and advise the minister.
In response, Bbumba said the bill on liberalising the pension sector will soon be tabled before cabinet. It provides for such a regulator.
THE National Social Security Fund (NSSF) may pay an interest rate of three percent to the fund’s contributors this financial year. Information obtained by Saturday Vision indicates that the new figure, which was agreed upon by the board, has been forwarded to finance minister Syda Bbumba for approval.
According to the NSSF Act, the minister was supposed to declare the interest rate before October 1 in consultation with the fund’s board of directors.
Sources said the minister could raise the interest rate, but that would mean the fund operating in deficit.
In August, the board chairman, Vincent Ssekono, said the workers would not get the 14% interest on their benefits as promised by the previous management. He attributed the change to NSSF losing a sh20b court case against Alcon, the company that had sued the fund for breach of contract on Workers’ House. NSSF has since appealed against the ruling.
NSSF doubled the interest paid to its members in July last year from 7% to 14% for the financial year 2007/08.
This was attributed to the rise in profits made by the fund. That rate was subsequently paid out to members.
However, speculations arose that the rate for the financial year 2008/09 would be much lower.
After the Temangalo land saga, NSSF was asked to suspend investments. Profits from its investments on the stock market slumped as a result of the fall in share prices. For example, the fund has invested in Stanbic shares which were selling at sh230 last year but are currently at sh160.
The new board has criticised the 14% interest that was declared during the David Jamwa administration as exaggerated.
On his part, the chairperson of the National Organisation of Trade Unions, Usher Owere, said: “Jamwa wanted to excite people; what he said was not right.†He, however, disagreed with Ssekono that the Alcon case caused the interest rate to drop.
Concurring with Owere is Lilian Mugerwa, the executive director of Platform for Labour Action, an organisation that coordinates 54 members of the civil society coalition on social security and pension reform.
“The investments made by NSSF can yield a higher interest rate than 2.5%. The abnormal profits that have been made can pay 14%,†said Mugerwa.
She called for the separation of management and policy such that the minister is left to work on policy matters while representatives of employers and employees are elected to sit on the board. This, she said, would enhance accountability.
“That is what we call contributor-centred reforms,†she said. “If members are not satisfied with their representatives, they can recall them. Currently, there is no forum for contributors to get feedback apart from the media.â€
At this moment the minister appoints the board, the managing director, the deputy and other senior officers.
Owere called for the amendment of the act to allow an independent body to appoint the fund’s management and advise the minister.
In response, Bbumba said the bill on liberalising the pension sector will soon be tabled before cabinet. It provides for such a regulator.