NSSF To Pay Savers 10.7% Following Govt’s Rejection Of Mid-term Access

NSSF To Pay Savers 10.7% Following Govt’s Rejection Of Mid-term Access

By Monica Kobusiinge

Kampala:National Social Security Fund (NSSF) has declared an unexpected double-digit interest rate of 10.75% for the financial year 2019/2020 where members are to earn Sh1.14 trillion on their accounts.

READ ALSO: Drama As Mp Lyomoki Turns Parliament Into Bedroom Over Delayed NSSF Bill

The 10.75% interest rate is a few points lower than last year’s 11% interest majorly due to the economic slowdown occasioned by the Covid-19 pandemic and deferment of dividend payments by Bank of Uganda, among other factors, that affected the Fund’s performance.

“Despite the Covid-19 pandemic that has affected the economy and many businesses, NSSF has remained resilient, meeting its annual business objectives especially in the areas of Assets Under Management (AUM) that grew by 17% from Sh11.3 trillion to Sh13.3trillion and the total revenue that increased by 17%,” Minister of Finance, Planning and Economic Development, Matia Kasaija said upon declaring the interest rate.

READ ALSO: Museveni Clashes With Finance Committee Members Over 20% NSSF Partial Payment

Minister of Finance, Planning & Economic Development, Matia Kasaija Applauding NSSF After Declaring The 10.75% Interest Rate.

“I would therefore like to congratulate the NSSF team upon delivering a remarkable performance in the 2019/2020 in spite of the challenging macro environment,”  Kasaija said during the Fund’s 8th Annual Members Meeting at Kampala Serena Hotel on Tuesday, September 2020.  

READ ALSO: Opinion: Why NSSF Proposed Amendment Is A Great Deal For Ugandans

The rate declared translates into a total of Sh1.14trillion that will be credited to the Funds more than two million members’ accounts. This is higher than the UGX933 billion that was paid to members in the previous financial year.

NSSF Interest Rate Over The Last 5 Years

Financial Year 2015-16 2016-17 2017-18  2018-19 2019-20
10-Year Average Inflation (Source: Bank of Uganda) 7.88% 7.71% 7.16% 6.28% 5.82%
NSSF Promise (10-year inflation puls 2%) 9.88% 9.71% 9.16% 8.28% 7.82%
NSSF Interest Rate 11.50% 11.23% 15.0% 11.0% 10.75%

Richard Byarugaba, NSSF Managing Director, re-echoed the Fund’s resilience in the tough operating environment, “Many businesses both locally and globally are either closing down or seeking solutions for survival rather than business expansion, I am happy that the Fund has been able to absorb the shocks as evidenced from our performance.”

READ ALSO: NSSF In Hot Soup, Ordered To Vomit Shs42Bn To URA After Losing Tax Dispute

The NSSF Chairman, Board of Directors, Patrick Kaberenge re-assured members that the Fund was still committed to preserving value for their savings saying, “Despite a tough investment environment characterized by a strong shilling and depressed equity markets, the return earned has remained stable,”

The 10.75% interest earned is above the 10-year average inflation rate of 5.82.

READ ALSO: NSSF To BoU Governor Mutebile: We Want To Verify Your Staff With  ‘Contentious Birth Dates’

About NSSF

The National Social Security Fund Uganda is a multi-trillion Fund mandated by Government through the NSSF Act, Cap 222 (Laws of Uganda) to provide social security services to employees in the private sector.

READ ALSO: Gov’t Tables Amendment Of NSSF Act To Allow Ugandans Get Partial Access To Savings

The Fund manages assets worth over Shs 13 trillion invested in Fixed Income, Equities and Real Estate assets within the East Africa region. As the largest Fund in East Africa by value, they have the ambitious goal of growing Assets Under Management to 20 trillion by 2025.

In other highlights, Assets Under Management increased by 17% from Shs 11.3 trillion to Shs 13.38 trillion as of June 30, 2020, mainly driven by increased contributions and interest income.

Total Revenue increased by 17% from Shs 1.25 trillion in 2018/19 to Shs1.47 trillion as at June 30, 2020, driven by growth in interest income as a result of exposure to high yielding fixed income investments and rental income.

READ ALSO: NSSF, Umeme To Headline This Year’s Business Forum

However, dividend income reduced by 19% from Shs77 billion as at June 30, 2019, to UGX 62 billion as at June 30, 2020, due to cancellation of dividend payouts by commercial banks.

Member contributions increased by only 5% from Shs 1.22 trillion to Shs 1.28 trillion. The marginal growth is attributed to the amnesty NSSF offered to business that was affected by Covid-19 pandemic. To put into context, the Fund deferred a total of about Shs 22 billion.

READ ALSO: COSASE Summons Nzeyi, NSSF Over Fraudulent Acquisition Of Departed Asians’ Properties

The money paid in benefits to qualifying members increased by 8% from Shs 450 billion in 2018/2019 to UGX 486 billion in 2019/20. Again, the marginal growth is as a result of Covid-19 when the country was in lock-down and a significant number of claimants opted to defer their claims.

Accessdome.com: an accessible web community

Related Post

Leave a Reply

Your email address will not be published. Required fields are marked *

//graizoah.com/afu.php?zoneid=3565727
%d bloggers like this: