NSSF to pay members 8.2% in interest

SAVINGS |

The National Social Security Fund (NSSF) will pay members at least 8.2% in interest for the financial year 2019/20, the lowest since 2009/10 due to the effect of measures to contain the COVID-19 pandemic, the fund management has said. 

Speaking to the media ahead of members annual general meeting on Monday, Richard Byarugaba, NSSF's managing director, explained that the pandemic had affected the funds' investments in Uganda and the East African Community.

"The environment, which is the economy, determines how we perform and it slowed down due to COVID-19. It is unlikely that we will pay members a double-digit rate. Financial Year 2009/10 is the last time we paid a single-digit interest," Byarugaba said. 

He noted that the fi nance minister will announce an interest rate for the over 2.5 million members that is at least 2% above the 6.2% average ten-year inflation level. This implies that interest to members will be at least 8.2%, which is below the previous interest of 11%. 

Byarugaba pointed out that the amnesty to firms at the height of the lockdown had slashed monthly contributions by sh20b, leaving just sh100b remitted per month.

He pointed out that Uganda's economy grew by an estimated 3% due to COVID-19, down from 5.2% the previous year. 

He said that interest rates, the value of shares in companies, dividends from firms where the NSSF has shares, and yields on government securities had significantly declined.

On the other hand, the Uganda shilling had gained against the Kenya shilling and the Tanzania shilling, which ate into the value of NSSF's assets in both countries.  

Despite that, NSSF's asset book grew by 17.2% to  sh13.38 trillion on the back of robust growth in rent from corporate tenants.

Byarugaba noted that the NSSF housing estate in Lubowa is 70% complete, the Pension Towers are about one year away from receiving tenants and a contractor has been secured to build the first 600 apartments in the first phase of a total 5,000 planned.   

Turning to the NSSF Amendment Bill 2019, he urged MPs to enable the fund invest outside EAC to diversify members' investments, for instance through investing in the lucrative European and US markets.

He said the Bill will improve the products members can access, if passed into law. 

Patrick Ayota, the deputy NSSF managing director, said the Bill would enable even informal workers to secure their future through saving with the fund.

He said the Fund's voluntary scheme had seen a bulge during the lockdown, growing by 2,000 members in April and 3,000 new members in June. 

"We have seen the number of voluntary savers over 55 years grow. These are people that could have taken out their money, but they have confidence in the NSSF. We have about 19,000 members over 55 years with savings worth sh99b," Ayota said.

He revealed that the NSSF has held discussions with professional associations, such as with schools and accountants, and private security firms about remitting contributions for their employees with the NSSF.

Ayota revealed that contributing employee's retirement benefi ts to the fund is now a condition for security firms getting a licence from the Uganda Police.