NIC owes Makerere varsity staff sh27b
THE National Insurance Corporation (NIC) owes Makerere University staff more money than earlier quoted, according to a new report by the Auditor General (AG).
By Francis Kagolo and Mary Karugaba
THE National Insurance Corporation (NIC) owes Makerere University staff more money than earlier quoted, according to a new report by the Auditor General (AG).
The report states that NIC owes Makerere sh26.9b, which is higher than what both the corporation and the university were quoting.
“Based on the work we have performed, we estimate the fair value of the MUK DAP fund as at August 31, 2010 to be sh22.5b in respect of existing members and sh4.4b in respect of members who left the scheme (retirees),†the report states.
According to the report, the amount due to existing members comprises a guaranteed element of sh18.6b and a bonus of sh3.9b.
For about half a decade, Makerere University has been at loggerheads with NIC over the disputed funds the insurance firm owed its staff.
While Makerere claimed the firm owed them sh17.1b, the insurer insisted it had sh13b.
The money accumulated between July 1996 and 2005, when the company operated a deposit administration plan (DAP) for the university’s pension scheme.
Under the contract, Makerere agreed to remit 5% deduction from eligible employees’ basic salaries, while the employer was to contribute 20% of the employees’ salary.
On the other hand, NIC undertook to pay the university staff their contributions, plus interest of 10% annually, and a bonus upon retirement.
Makerere stopped making contributions to the DAP in June 2005, following Government’s decision to privatise NIC, where the majority stake (60%) was sold to Industrial and General Insurance Plc, a Nigerian firm.
At the time, the university demanded immediate withdrawal of the funds totaling sh17.1b, but NIC said the lecturers and other staff had inflated the figure.
Last year, President Yoweri Museveni asked the AG to verify the value of the DAP fund as part of the process to help resolve the impasse.
This followed a week-long sit-down strike by the university staff in August.
According to the audit report compiled by the PriceWaterHouseCoopers on behalf of the AG, both Makerere University and staff remitted close to sh30b during the nine years NIC operated the scheme. Interest on the money kept varying over the years, but NIC had to deduct some administrative costs.
The auditors also verified that various Makerere retired staff had withdrawn from NIC sh7.5b over the years.
The report faults the university over delays to remit deductions made from the payroll as per the contract.
“Staff members lost interest that would have been earned had the university remitted their contributions in accordance with the policy.â€
The audit also faulted NIC over revising the interest rates retrospectively, without giving the university the requisite three months’ notice.
Dr. Tanga Odoi, the chairman of the university lecturers’ association, said: “Lecturers do not earn good salaries; but it is more annoying when they retire and fail to recover their packages.â€
He said they want the money to be released before the end of this month.
However, he explained that NIC ought to deduct the sh10b disbursed after the President intervened.
The money was paid by the Government through NIC in an effort to calm the then irritated lecturers.
This means that NIC now remains with a balance of sh16.9b, out of the sh26.9b.
NIC chief Sam Njoroge said they were studying the report to submit their response to the finance minister.
THE National Insurance Corporation (NIC) owes Makerere University staff more money than earlier quoted, according to a new report by the Auditor General (AG).
The report states that NIC owes Makerere sh26.9b, which is higher than what both the corporation and the university were quoting.
“Based on the work we have performed, we estimate the fair value of the MUK DAP fund as at August 31, 2010 to be sh22.5b in respect of existing members and sh4.4b in respect of members who left the scheme (retirees),†the report states.
According to the report, the amount due to existing members comprises a guaranteed element of sh18.6b and a bonus of sh3.9b.
For about half a decade, Makerere University has been at loggerheads with NIC over the disputed funds the insurance firm owed its staff.
While Makerere claimed the firm owed them sh17.1b, the insurer insisted it had sh13b.
The money accumulated between July 1996 and 2005, when the company operated a deposit administration plan (DAP) for the university’s pension scheme.
Under the contract, Makerere agreed to remit 5% deduction from eligible employees’ basic salaries, while the employer was to contribute 20% of the employees’ salary.
On the other hand, NIC undertook to pay the university staff their contributions, plus interest of 10% annually, and a bonus upon retirement.
Makerere stopped making contributions to the DAP in June 2005, following Government’s decision to privatise NIC, where the majority stake (60%) was sold to Industrial and General Insurance Plc, a Nigerian firm.
At the time, the university demanded immediate withdrawal of the funds totaling sh17.1b, but NIC said the lecturers and other staff had inflated the figure.
Last year, President Yoweri Museveni asked the AG to verify the value of the DAP fund as part of the process to help resolve the impasse.
This followed a week-long sit-down strike by the university staff in August.
According to the audit report compiled by the PriceWaterHouseCoopers on behalf of the AG, both Makerere University and staff remitted close to sh30b during the nine years NIC operated the scheme. Interest on the money kept varying over the years, but NIC had to deduct some administrative costs.
The auditors also verified that various Makerere retired staff had withdrawn from NIC sh7.5b over the years.
The report faults the university over delays to remit deductions made from the payroll as per the contract.
“Staff members lost interest that would have been earned had the university remitted their contributions in accordance with the policy.â€
The audit also faulted NIC over revising the interest rates retrospectively, without giving the university the requisite three months’ notice.
Dr. Tanga Odoi, the chairman of the university lecturers’ association, said: “Lecturers do not earn good salaries; but it is more annoying when they retire and fail to recover their packages.â€
He said they want the money to be released before the end of this month.
However, he explained that NIC ought to deduct the sh10b disbursed after the President intervened.
The money was paid by the Government through NIC in an effort to calm the then irritated lecturers.
This means that NIC now remains with a balance of sh16.9b, out of the sh26.9b.
NIC chief Sam Njoroge said they were studying the report to submit their response to the finance minister.