Gender, Finance Ministries Officials Lock Horns Over NSSF

Gender, Finance Ministries Officials Lock Horns Over NSSF

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By Andrew Irumba

Kampala: A bitter clash is raging on between Janat Mukwaya, the minister for Gender, Labour and Social Development and Gabriel Ajedra, the General Duties State Minister in the Finance, Planning and Economic Development Ministry over certain provisions in the National Social Security Fund Amendment Bill, 2019.

While appearing before the Gender and Finance Committee of parliament, which is scrutinizing the Bill, both Mukwaya and Ajedra expressed contrasting views about the matter.

The Bill seeks to among others make it mandatory for all workers to register and contribute to NSSF, allow self-employed people to contribute to NSSF, midterm access to  benefits for only voluntary members and that the NSSF board shall have a role in the appointment of the Managing Director.  

Whereas Mukwaya argued that the Gender Ministry was mandated by Cabinet to present the Bill to Parliament for the first reading, which makes the Bill the official position of government, Ajedra told MPs that the Finance Ministry has reservations on some provisions in the bill.

Mukwaya says the Bill empowers the board to among other functions, supervise management, introduce new benefits, and advise on investment of scheme funds including lending to government.

 However, the most controversial provisions include the proposed expansion of the of NSSF coverage through mandatory contribution from all firms that have employees, not a minimum of five workers as provided in the 1985 NSSF Act, and the proposal to tax benefits of savers who withdraw before attaining the age of 60 years.

Mukwaya said the tax exemption provision caters for employer’s contributions and employee’s contributions below 30 percent of their income and investment income of NSSF.

 She also noted that members’ benefits shall be taxed only during payment at 55 years while those who get paid at 60 years and above will not pay taxes on any benefit.

She explained that the tax exemption provision will improve effectiveness of benefits by encouraging additional retirement savings from the informal and formal sector by deferring taxation on contributions made and scheme income derived after the enactment of the Bill. 

However, Ajedra said that it would be better if the Bill sticks to the social protection aspects of the provident fund and not financial components such as taxation, which impact the economy.

He explained to the MPs that NSSF with capital of about Shs10 trillion has about 10percent of Uganda’s GDP, which therefore requires discussion on how these monies should be invested, by who and where, with the aim of increasing benefits to savers.

However, Mukwaya said that much as Economists like Ajedra and ministry of finance have the mandate to determine the NSSF investment plan, there is need to ensure that they function in line with the International Labour Organisation that was key in the establishment of the fund.

She also said that government should be fair to

MPs led by the Gender Committee chairperson, Alex Ndeezi wondered why the ministers have failed to harmonize their positions on the Bill.

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