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Workers deserve full savings and also pension

By Vision Reporter

Added 4th September 2011 03:00 AM

NEWS and statements on NSSF in the press have attracted attention of many private sector employees and employers who are the major stakeholders. The contributors are anxious about the liberalisation of the pension sector and how it will affect their savings.

NEWS and statements on NSSF in the press have attracted attention of many private sector employees and employers who are the major stakeholders. The contributors are anxious about the liberalisation of the pension sector and how it will affect their savings.

Nuwagira N. Mwejune

NEWS and statements on NSSF in the press have attracted attention of many private sector employees and employers who are the major stakeholders. The contributors are anxious about the liberalisation of the pension sector and how it will affect their savings.

Quoting UBOS statistics in the New Vision of February 27, the private sector employees’ salaries has hit sh880b. This is good news to NSSF and all organizations interested in managing the pension fund, but how does this translate to social security?

How will social security improve in a liberalised environment as explained by NSSF managing director in the New Vision of July 25? For the workers, the primary interest is the assurance that their savings are safe and are invested better than if they received the money and invested it themselves.

Transformation of NSSF

Transformation of NSSF from provident fund to pension scheme is a good idea, but NSSF should pay 100% of the current savings and pension too!

NSSF boasts of a big asset base of sh2.1 trillion which was built over time using savings of workers and contributions from employers.

The question then is who will own the assets after liberalization and how can the contributors benefit from the assets they contributed to build? The number of contributors will be higher than the beneficiaries/retired workers for a young population like Uganda.

With the advantage of already built capacity, the growing private sector, the new and existing contributors, NSSF can pay a minimum pension of 15% salary at the time of retirement for a retired contributor. A higher percentage is also possible. The contributors will then benefit from the capacity they contributed to build.

The idea of paying 33% at the time retirement and pension there after has been floated. You need to consider contributors who started contributing years ago and are about to retire.

Majority of these have plans which are as old as 20 or more years on how they are going to use 100% of their savings. The proposed plan of 33% down payment at retirement is, therefore, not in line with the contractual obligation to the old contributors.

Narrow scope of NSSF

Currently, the coverage of NSSF is limited to employees in private sector. Pension scheme is limited to Government employees.

Other social security arrangements cover employees in organizations employing more than five persons. Social security, therefore, seems to be designed to cater for the advantaged persons in society. They are educated, employed and with the capacity to plan for their future and the future of their families.

Social security in Uganda is, therefore, narrowly defined or set to cover the already socially secured. Secondary, there are many employed persons who are left out. These include self-employed persons and those working in small businesses.

The vulnerable persons in our society have no “social security”. This threatens the security of society in general. The vulnerable persons include the poor, the drug addicts, alcoholics, and persons with mental illness, children from poor families and orphans, the aged and the poor disabled persons. There is also a growing population of able-bodied persons who are unemployed.

Society should take responsibility to care for its disadvantaged. The street children will grow into strong adults. They will be shy to beg on the streets but their needs will be more than the sh100 they are asking for today. They will question the unfairness of society. They will demand for a share of the world’s and society’s resources by force or robbing.

Expand scope of social security

Liberalization of social security sector may result in improved efficiency and benefit the contributors but social security should not be limited to financial benefits. Walking on Kampala streets, you observe many indicators of social insecurity. Street kids are a time bomb. Mentally sick persons walk together with children and sleep on verandahs and feed on garbage.

Mentally sick persons are kept in homes without any medical attention. Stories of mentally sick persons killing babies, children and families have been reported by the press. Some parents are abandoning families and in some cases killing whole families because of poverty.

This makes our country unsafe to all of us. This is likely to worsen if the Government does not design policies that will improve social security for the disadvantaged persons as we get more urbanised with reduced social support.

This will result in rampant drug use; elderly people who were not formally employed fending for themselves, more mentally ill patients roaming unattended to on the streets and more street children growing into street families.

As the Government liberalises management of the social security, measures should also be put in place to ensure that society looks after its disadvantaged. A social security tax, designed to cater for costs of maintaining the disadvantaged in society can be levied on the working Ugandans.

The social security tax can be used to put up and maintain homes for the elderly, rehabilitation centres and welfare for the disadvantaged for food and basic needs in emergency situations and treat the mentally in centres designed to provide counselling and humane treatment.

Social security for the aged groups

Traditional African social security is through the family structure.
Modernisation through formal education and migration in search of employment has eroded the traditional African setting without providing an alternative. This has been worsened by HIV/AIDS.

Care of the aged and orphans was originally a family task. Children would look after their aged parents. There are indicators that the problem is getting worse. The Government programme to pay the aged/senior citizens is good but how much can you pay to enable the weak live comfortably?

It is time to start planning homes for the aged. Homes for the aged will reap economies of scale in terms of labour and medical attention. Some working families are willing to pay for such services.

Medical attention and costs are a nightmare for families who take care of the aged, our senior citizens. Some of the senior citizens were contributors to NSSF. Where is social security in such cases? Is it possible to have medical insurance as part of social security?

The author is General Manager UCTU

Workers deserve full savings and also pension

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