Legislators approve NSSF mid-term access

NSSF PARLIAMENT

KAMPALA - Parliament on Thursday approved most of the 29 clauses in the National Social Security (NSSF) Amendment Bill.

The principle of allowing midterm access to NSSF members who have saved for at least 10 years or have reached 45 years was agreed upon, but there was contention on whether to fix at 20% or allow the board to determine the percentage basing on the studies it will have carried out.

Parliament also approved Clause 4 of the Bill, which provides for expanding social security coverage, by making contributions to the NSSF mandatory for all workers in the formal sector, regardless of the number of employees.

It also allows workers in the formal and informal sectors to make voluntary contributions.

As recommended by the joint gender and finance committee, led by Alex Ndeezi, Parliament rejected Clause 12 of the Bill in which the Government had sought permission to be allowed to directly borrow from the NSSF.

Ndezi said: "In practice, NSSF already lends to the Government through government securities, treasury bills and bonds or other instruments sold on the open market. Lending through the open market ensures that members' funds are protected from transactions below-market interest rates, high costs are not imposed on savers."

Parliament also deleted Clause 19 in which the Government had proposed to subject the members' savings to an income tax of 30% upon withdrawal.

After a heated debate, the House stood over the matter on whether NSSF would be under the finance ministry or gender ministry.

State minister for finance Gabriel Aridru informed Parliament that Cabinet and President Yoweri Museveni had resolved that NSSF would remain under the finance ministry, which has been supervising it for the last 10 years.

Even when gender minister Frank Tumwebaze told the House that his ministry agrees with the position of Cabinet and the President, several legislators insisted that the fund ought to be under the gender ministry. The proposal from a minority report by Kenneth Lubogo (Bulamogi County) of the need to allow NSSF members, regardless of their age, to access a fraction of their savings when they become unemployed, was also agreed upon but stood over in regard to the 40% he had proposed.

Tumwebaze had opposed fixing percentages in the law, arguing that fixing a percentage would require actuarial studies to be carried out and, therefore, it was necessary to leave it to the board. But some legislators, including Elijah Okupa (Kasilo County) and Lubogo, insisted on a fixed range, arguing that leaving it to the board was likely to disadvantage the members.

Okupa said NSSF management has frustrated many Ugandans who attempt to get their savings when they are critically ill and, therefore, leaving it to the board would be creating such frustrations to members.

Following arguments made by Workers' MP Sam Lyomoki on what he called an illegality of the Uganda Retirement Benefits Regulatory Authority's (URBRA) 0.05% levy on the NSSF funds, Parliament deleted clause 20, which was proposing to maintain the levy, which workers' leaders have always protested.

Parliament is expected to harmonise the remaining controversial clauses and the Bill will be passed when the House reconvenes next week.

Principles of bill

Before passing most of the clauses, Speaker Rebecca Kadaga allowed Busongora County MP William Nzoghu to table his motion, urging the Government to allow contributors to access 20% of their savings in light of the economic distress caused by the COVID-19 pandemic.

"NSSF has 1.5million members who contribute over 1.8 trillion in savings annually and the fund has over sh11.2 trillion in assets, availing members with their savings will help lessen the negative impact of COVID-19 to over 1.5 million households," Nzoghu said. During the debate of both the motion and the report on the NSSF Bill, MPs supported the 20% midterm access to the savings by members, especially during hard times.

"The first responsibility of NSSF is to the savers, not the Government. I support that members are allowed to access their 20%," Angelline Osegge (Woman MP Soroti District) said.