NSSF holds 86% of all pension assets - report

Mr David Nyakundi Bonyi, the chief executive officer URBRA. File photo

What you need to know:

Membership. The fund has about 1.5 million savers.

Kampala. The National Social Security Fund (NSSF) is the most dominant player in Uganda’s pension sector, a report by the industry regulator has revealed. The Uganda Retirements Benefits Regulatory Authority (URBRA) on Wednesday released its inaugural report for the sector as of 2014. In the report, the industry indicates that the entire pensions sector held assets worth Shs5.1 trillion with NSSF holding at least Shs4.4 trillion of this.
NSSF’s dominance is highlighted in its membership which more than doubles that of the Public Service Pension Scheme, Parliamentary Pension Scheme and other Occupational Retirement Benefit Schemes. NSSF has a membership of about 1.5 million savers.


“The total membership recorded was 1.9 million individuals representing 14 per cent of the total national labour force, which is 13.9 million. Of this membership, some are inactive in terms of saving for retirement,” Mr David Nyakundi Bonyi, the chief executive officer URBRA, told reporters at a media briefing on Wednesday.
The bulk of the pension schemes also play it safe when it comes to investment as most of their investments are placed in government securities.


“Bonds are a popular asset class due to their attractive return-risk characteristics, good quality and relatively long durations,” the report reads.


Direct holdings of government debt securities comprised 57.8 per cent of total investments, fixed and term deposits were at 14.4per cent and immovable property at 9 per cent. However, it was also noted that the schemes were still investing far below the set targets on all the investment classes.
Mr Benjamin Katende, a senior researcher at URBRA, said the sector was still performing below par because of the limited penetration. He also raised concerns on high administrative expenses that the sector continued to incur. The sector spent at least 27 per cent of the total Shs1.3 trillion income on administration expenses, the report reveals.


“Operating expenses varied strongly mainly due to governance and scale effects,” Katende adds.
URBRA has been advocating for the liberalisation of the pension sector but this has hit a stalemate. URBRA officials indicate that if the sector is liberalised it would open up investment options and bring more members into pension schemes.


The liberalisation, however, hit a setback in December 2015 when President Museveni revealed that he was not yet convinced why opening up the sector was an option considering the good performance of NSSF.
“What the President said was that he was not convinced by either side. What we have to do is to convince him why the reforms are necessary. We still have the belief that the bill will be passed,” Mr Bonyi said.

About URBRA
URBRA was founded in 2012 to regulate the pension sector but only appointed a CEO at the start of 2015. The report released on Wednesday is expected to be the benchmark for the entire sector going forward.