NSSF wants to retain monopoly

Mar 16, 2011

THE National Social Security Fund (NSSF) should retain its status as a mandatory scheme for all employees when the proposed liberalisation Bills are passed into law, NSSF officials have proposed.

By Mary Karugaba

THE National Social Security Fund (NSSF) should retain its status as a mandatory scheme for all employees when the proposed liberalisation Bills are passed into law, NSSF officials have proposed.

NSSF chiefs have proposed that the liberalisation of the management of workers’ pension be partial and not be completely put in the hands of private schemes.

The NSSF board and management chiefs were submitting their views on the proposed Uganda Retirement Benefits Authority Bill, 2010.

The group, led by NSSF board chairman Vincent Ssekono, told Parliament’s finance committee yesterday that the Government would be exposed to huge risks of paying billions of shillings to workers in case some of the schemes collapsed.

The committte is currently scrutinising the Bill.

“We should not go for full liberalisation. To ensure security of the workers’ money, it should be made compulsory for workers to save a certain percentage with NSSF, and the other to schemes of their choice so that in case the schemes collapse, the state is able to compensate the workers,” Ssekono said.

After several calls to liberalise and reform the pension sector, the Government in 2009 tabled the Uganda Retirement Benefits Authority Bill, 2010 to stop NSSF’s monopoly to manage pensions.

The Bill due to be passed by Parliament next week, also proposes that a person who desires to establish a retirement benefits scheme has to apply for a licence, upon payment of a fee. Existing providers will have to obtain new licences.

NSSF has had numerous financial scandals over the years.

The Fund takes 5% of the salary, while the employer tops-up 10%. However, the workers can only get their benefits after clocking 55 years of age. They also cannot use their savings as security for a loan from a bank. Besides, the interest paid on the savings is often below the inflation rate.

The new Bill calls for radical reforms such as the opening up of the pension sector and allowing savers to use their contributions to secure bank loans and mortgages to buy residential houses, among other needs.

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