Last week, I wrote about why paying out 20 per cent to all NSSF savers would actually be against their own good. I received a lot of feedback, both directly in my inbox, as well as what was communicated across social media platforms where what I wrote was published. Having not been able to respond to all the feedback, I hope to be able to offer some responses through this follow-up commentary.

Many of the commentators who reacted to what I wrote would wish that NSSF pays them their savings, even without the coronavirus crisis. Some express that 20 per cent payout is actually small and they would wish more to be paid out. In some extreme cases, savers expressed a total lack of appreciation of the relevance of NSSF to them.

There was also a large display of mistrust in the fund as well expression of fear that the longer NSSF stayed with savers’ monies, the higher the chances that something could go wrong and savers would lose their entire careers’ toil in savings. The direct pegging of the proposed payout to coronavirus came out as well, but not as strongly as the above.

To begin with, I suspected that the lack of trust in NSSF could have come from failure by the fund to meet payout obligations when they were due, but none of the persons I engaged with seemed aware of a single case of a saver who did not get paid when his savings fell due. On the other hand, I knew a couple of people who had been able to get paid their savings within two weeks of applying for them, in the recent past. It is therefore logical to assume that mistrust in NSSF is driven by rumours or a lack of appreciation of the model it is designed against.

Whereas NSSF should become more aggressive to enhance their reputation management programme to address the above, these are indicators that savers, far from needing relief in the current pandemic situation, may be anxious for expiring or thinning out their relationship with a good scheme without proper analysis.

We have to contextualize the fact that generally, ours is not a culture that is good at saving. Uganda’s saving rate at about 18.3 per cent of GDP (2018) is below global average. It is possible that to begin with, the pressure on NSSF for an impromptu payout is derived from an extensive lack of fallback in alternative savings by fund members.

If that be the case, then the compromises dictated by an unplanned sudden payout by the fund will even be more hurtful. There is a general expression by a section of savers that they should be left to deploy their monies in NSSF as they wish. This is because those savers believe that they will be able to find more lucrative investment options than the fund currently applies their monies to.

However, if this was so, given that deductions from savers’ pay is in effect only five per cent, we would possibly be a much healthier society. We would be deploying a part of the 95 per cent of our remuneration which is left with us after taxes, to impressive effect. Furthermore, for those anxious to deploy NSSF monies in ventures that they run themselves, we should note that business failure rate in Uganda was as high as 50 per cent as early as 15 years ago.

It is therefore rational that a saver leaves NSSF savings in the perceived conservative investment parcel of the fund and tries out more risk-attracting ventures with separate funds that they remain with after NSSF deductions. What then would not worry savers is that if they got NSSF funds at say 55, they would have to invest in fresh ventures and start from scratch. NSSF monies would come in to facilitate a decent lifestyle in retirement, and partly supplement already existing ventures. This is the ideal.

As savers with NSSF, we need to probe our savings status outside the fund and be honest with the result. If it is that we would not have savings to talk about without NSSF, we would do well to stop agitating for extraction of our monies from the fund at the earliest opportunity. We thus should avoid modeling the fund to regularly address crises faced in young age. It is better to leave NSSF as a fallback for old age, as it currently is. We can advocate for initiatives that support us as savers, without us massively withdrawing savings and destabilising the fund.

Raymond is a Chartered Risk Analyst and risk management consultant
rmugisha@afriaccent.com