NSSF proposes lower age limit to access savings
Sep 13, 2010
THE Cabinet is set to discuss the amendments of the National Social Security Fund (NSSF) Act, which would among other things, entitle members to access their money at the age of 45 years and use their savings as collateral for loans.
By Patrick Jaramogi
THE Cabinet is set to discuss the amendments of the National Social Security Fund (NSSF) Act, which would among other things, entitle members to access their money at the age of 45 years and use their savings as collateral for loans.
The proposed amendments, endorsed by the NSSF board last week, have been forwarded to finance minister Syda Bbumba.
“We resolved as the NSSF board to amend the Act to create more benefits for the contributors. The board passed the amendments and it is now before the Cabinet for discussion and approval,†said NSSF board member Arinaitwe Katambuka.
Bbumba said the amendment proposal would be forwarded to Parliament for approval after getting the nod from the Cabinet.
The NSSF Act has been described by workers as unfair because it limits benefits to the contributors.
Katambuka, the newly-elected NRM workers’ representative flag-bearer, told New Vision that if passed, the workers’ savings would not be tampered with again.
“Under the new amendments, contributors will be paid their benefits once they clock 45 years. Previously it was 55 years,†Katambuka explained.
“A person who has saved for over 10 years is entitled to a 30% payment of his/her savings when he has a pressing problem like illness, an accident or needs fees for the education of his children,†he added.
The board also agreed that a health insurance be created for contributors and later to their immediate families, Katambuka said.
“Housing is a serious issue for our workers. We have proposed that we build houses and give out to contributors who have saved for 10 years or give them housing loans from their savings.â€
Katambuka said workers who need to get loans from commercial banks will be recommended by NSSF to secure the loans with their savings acting as collateral.
The new amendments will also have over 50% of the NSSF board constituted by workers representatives. Currently, only five members of the board are workers’ representatives. “The amended Act will empower the NSSF board to hire and fire the management,†said Katambuka.
Currently the managing director is appointed by the finance minister.
NSSF, which is the biggest holder of pension funds in the country, was set up by the NSSF Act, 1985.
According to the Act, an employer is supposed to remit 10% of a worker’s salary to the fund, while the employee contributes 5%.
Various stakeholders have complained of NSSF’s monopoly, saying it makes the firm management complacent.
There have also been calls for the liberalisation of the fund, which have raised fears of unprincipled moguls taking over the massive savings and using them to further dominate businesses in their own interests.
The wrangles that have been eminent between the finance and social development ministries may cease following a recommendation in the amendments that the workers body be autonomous.
The National Organisation of Trade Union (NOTU) chairman, General Wilson Owere, said the amendments were endorsed by the two trade unions, NOTU and the Confederation of Free Trade Unions (COFTU).
“These amendments will curb the misuse of workers savings,†Owere said. He, however, said NOTU and COFTU had suggested that the age for benefit payment be reduced to 50 years and not 45 years.
“We fear that if contributors are paid at 45 years, the money may be finished from the NSSF fund,†Owere said.
The workers also want the range of benefits expanded to include unemployment benefits and health insurance benefit.
According to statistics, NSSF generates at least sh1b each day as contribution from workers.
THE Cabinet is set to discuss the amendments of the National Social Security Fund (NSSF) Act, which would among other things, entitle members to access their money at the age of 45 years and use their savings as collateral for loans.
The proposed amendments, endorsed by the NSSF board last week, have been forwarded to finance minister Syda Bbumba.
“We resolved as the NSSF board to amend the Act to create more benefits for the contributors. The board passed the amendments and it is now before the Cabinet for discussion and approval,†said NSSF board member Arinaitwe Katambuka.
Bbumba said the amendment proposal would be forwarded to Parliament for approval after getting the nod from the Cabinet.
The NSSF Act has been described by workers as unfair because it limits benefits to the contributors.
Katambuka, the newly-elected NRM workers’ representative flag-bearer, told New Vision that if passed, the workers’ savings would not be tampered with again.
“Under the new amendments, contributors will be paid their benefits once they clock 45 years. Previously it was 55 years,†Katambuka explained.
“A person who has saved for over 10 years is entitled to a 30% payment of his/her savings when he has a pressing problem like illness, an accident or needs fees for the education of his children,†he added.
The board also agreed that a health insurance be created for contributors and later to their immediate families, Katambuka said.
“Housing is a serious issue for our workers. We have proposed that we build houses and give out to contributors who have saved for 10 years or give them housing loans from their savings.â€
Katambuka said workers who need to get loans from commercial banks will be recommended by NSSF to secure the loans with their savings acting as collateral.
The new amendments will also have over 50% of the NSSF board constituted by workers representatives. Currently, only five members of the board are workers’ representatives. “The amended Act will empower the NSSF board to hire and fire the management,†said Katambuka.
Currently the managing director is appointed by the finance minister.
NSSF, which is the biggest holder of pension funds in the country, was set up by the NSSF Act, 1985.
According to the Act, an employer is supposed to remit 10% of a worker’s salary to the fund, while the employee contributes 5%.
Various stakeholders have complained of NSSF’s monopoly, saying it makes the firm management complacent.
There have also been calls for the liberalisation of the fund, which have raised fears of unprincipled moguls taking over the massive savings and using them to further dominate businesses in their own interests.
The wrangles that have been eminent between the finance and social development ministries may cease following a recommendation in the amendments that the workers body be autonomous.
The National Organisation of Trade Union (NOTU) chairman, General Wilson Owere, said the amendments were endorsed by the two trade unions, NOTU and the Confederation of Free Trade Unions (COFTU).
“These amendments will curb the misuse of workers savings,†Owere said. He, however, said NOTU and COFTU had suggested that the age for benefit payment be reduced to 50 years and not 45 years.
“We fear that if contributors are paid at 45 years, the money may be finished from the NSSF fund,†Owere said.
The workers also want the range of benefits expanded to include unemployment benefits and health insurance benefit.
According to statistics, NSSF generates at least sh1b each day as contribution from workers.