Row deepens over NSSF liberalisation

By Patrick Jaramogi

National Organisation of Trade Unions (NOTU) and the Central Organisation of Free Trade Unions (COFTU) have vowed to block the intended liberalization of the Retirement and pension sector describing the move as ‘fraudulent”.

“We are not happy with way the Ministry of Finance has introduced the concept of liberalization of the pensions and retirement sector. The reasons given for this are based on wrong grounds,” said Peter Christopher Werikhe the NOTU secretary General.

National Social Security Fund (NSSF) is a Provident Fund mandated to provide social security to its members as prescribed by law under CAP 222 through the efficient and effective management of members' contributions

Werikhe said the proposed liberalisation of the pension sector remains the most irrational policy option whose achievement is based on imaginations that are really farfetched.

The NSSF is set to be transformed into a social security insurance pension’s fund - so as to give monthly pensions rather than a one-off lump sum payment which workers vehemently oppose.

“The bill provides that it is unsustainable for Government to pay its’ civil servants pensions that is why they want to liberalise the pension sector to ensure public servants contribute”  which is a breach of contract” said Werikhe.

NSSF remains the most financially liquid institution in the country. Today, NSSF’s net worth is Shs2.8 trillion and has over 400,000 registered members. The Fund pays out over shillings 6 billion on average every month.

COFTU’s acting secretary General Robert Wanzusi said the past alleged mismanagement of NSSF that included the issues of Nsimbe Estates, Alcon saga and Temangalo were dealings of individuals working hand in hand with the Ministry of Finance officials but it was not the initiative of the management of NSSF.

“Therefore the negative effects arising out of those dealings should be vested on government for interference on grounds of influence peddling but not entirely on the NSSF management” said Wanzusi.

He pointed out that ever since the NSSF was transferred to the Ministry of Finance from that of Gender, there has not been any desk at the finance ministry to handle the firm unlike in the Gender ministry where they had the Commissioner for labor.
 “What we now want is a regulator to oversee operations at the NSSF and not this so called liberalisation whose only motive is to access savings that have accumulated at the fund for investment into private venture,” he said.

Wanzusi said as workers representatives, they will not allow the sector to be liberalized because the intentions are really bad and shall put the workers’ savings at risk.

“As for the allegations that there is monopoly by NSSF, the framers of the bill are also peddling false hood because this is not true in a sense that the NSSF Act allows the minister to license any other scheme with similar or better services than NSSF to operate and such a scheme can be exempted from contributing to NSSF like is the case with National Insurance Corporation (NIC),”

“We have decided to work together, (COFTU and NOTU) and shall not allow anybody to betray us on NSSF. We shall not allow what happened to Makerere and NIC happen to NSSF,” said Wanzusi.

Werikhe further pointed out that liberalizing the sector would also have far reaching effects on Commercial banks due to capital flight because NSSF is a major capital provider for the country’s banking sector. It is very difficult at the moment to transfer funds out of the country from NSSF.

NSSF has at least shs800 billion of its current portfolio of Shs2.8 trillion held in fixed deposits accounts in commercial banks. With an additional Shs1.4 trillion held in government bonds and Shs200 billion in stocks.

Wanzusi further says that the submitted National Social Security Pensions draft Bill in Parliament has left out key issues and these are done deliberately to disadvantage the workers. “The bill is an attempt to impoverish the workers and reduce them to being dependent on monthly hand outs other than allowing them to receive their savings and plan for their future and that of their children,” he said.

“Even then what was presented to Parliament was the Pension and Retirement, yet what is being discussed by the task force is retirement in exclusion of the pension although the law is allegedly focused on the pension sector in the country,” said Werikhe.

He said the task force discussing the draft bill has also lost form because it is now not even possible to understand who the real members of the task force are. “It started with fourteen members, when NOTU and COFTU protested an additional eight members representing them were added and this largely changed the direction of the debate on the task force,” he said.

He said at the moment majority of the people introduced on the task force are from insurance companies and stock markets who are framing a law to suit their interests but not those of the intended beneficiaries.