KAMPALA – NSSF declared 10.75% as the interest for its members for this period which was a good return on investment under the circumstances. I quickly noticed that the declared interest was based on my statement balance as at the end of June 2019 instead of June 2020. On inquiry as to why this was so, NSSF responded that as per the NSSF Act of 1985, interest is declared on the balance as at June of the previous year. Indeed when I consulted the NSSF Act 1985 I confirmed that NSSF was acting within the law.
To break this down a little bit, NSSF collected money from its members from July 2019 upto June 2020 and this money will not earn any interest for its members until June 2021! A total of 12 months worth of savings by members does not earn them any interest for a whole year! Granted at the time NSSF was set up investment options were few, equity markets were yet to take root in Uganda as an investment option and we can understand why the framers of the Act made such a provision. But looking at the current investment options available to NSSF now, one cannot help but feel that savers are being short changed. I wonder how many savers are even aware that this is what happens with their monthly savings!
Given that it is now possible for anyone and definitely NSSF to fix money at the beginning of the month and earn an interest at the end of that month, why would NSSF keep hard saved money for 12 months before that money can earn interest for its members? Is it true that indeed for 12 months, the money saved is just kept and is not earning interest or profit? If it is earning profit/interest which does not trickle down to the savers where does it go and how is it accounted for?
Speaking numbers, NSSF collects about 100 billion monthly from the savers which amounts to over a trillion shillings in 12 months. What sort of fund manager keeps such an amount idle? If indeed it turns out that this money is just kept for 12 months and not invested at all then i think NSSF members should sue the fund for incompetence in the first degree! Could this explain why previous managers were caught with their hands in the till? Such an idle sum must have been too tempting for them!
Savers expect that their savings should work hard for them just like they work hard to make that monthly saving. For one to learn that over the years, the savings they have been making every month do not earn for them any profit/interest until after 12 months is at best demotivating.
As the NSSF amendment Act gets debated, this is among some of the most vital amendments that one would expect to see. For the management of NSSF it is not enough to say that you are acting within the law. If the fund is to remain relevant and competitive in the retirement benefits sector, we expect that such progressive ideas/amendments to the NSSF Act should come from within the Fund. That is when we shall believe that indeed you have the best interest of your savers at heart and perhaps grow the fund further. But as it stands, one cannot help but feel short changed!
James T. Yesiga, The Patriot
