Defaulting companies owe NSSF Shs54b
Kampala. There are about 3,900 companies that the National Social Security Fund (NSSF) is currently investigating, in order to recover Shs53.6b.
This amount arises from unremitted employee contributions as at June 30, 2017. In the wake of allegations that Crane Bank was defaulting on contributions of its expatriate staff to a tune of Shs8.5b, Daily Monitor sought to establish how many other companies were non-compliant with NSSF.
Mr Richard Byarugaba, the NSSF managing director, revealed that the level of compliance had improved, despite the rather high amount in default.
“The Fund has made tremendous progress in its efforts to recover social security contributions from non-compliant employers over the years, evidenced by our compliance rate which is over 80 per cent from as low as 49 per cent in 2011,” Mr Byarugaba revealed.
The NSSF Act provides for mandatory contributions by an employer on a monthly basis if they employ 5 people and above. An employer is supposed to contribute 10 per cent of the gross salary of an employee, whereas an employee contributes 5 per cent of their gross pay. It is the responsibility of the employer to remit the money to NSSF, according to the act. Daily Monitor understands that of 3,900 companies, NSSF is carrying out compliance audits on 400 companies and that some of the defaulting companies, it is employees that used the whistleblower platform.
“In January 2017, the Fund unveiled a web-based whistleblower platform through which workers and the public can report employers who do not remit their contributions to the Fund, as required by the law,” Byarugaba notes.
In this, the fund reveals that about 418 cases had been reported, including the Shs8.5b due from Crane Bank and another Shs6b in arrears from other employees. Mr Byarugaba reveals that Shs4b had been recovered. The unremitted amounts due from Crane Bank await a case filed in the commercial court by Bank of Uganda (BoU) against Mr Sudhir Ruparelia.
For companies that are in default, the NSSF Act provides for a penalty. According to the Act, the penalty for being in default is 10 per cent of the total amount defaulted. The penalty, in most instances, is higher than the total amount due to NSSF. As at end of the 2016/17 financial year, the total amount in penalties for defaulting was about Shs267b. This amount is almost four times more than the total amount in default.
The penalty, according to Mr Byarugaba, is meant to deter companies from defaulting on payments.
However, the Act also gives the managing director of the fund to waive the penalty.
On top of the penalties, another Shs22.5b is interest due on the defaulted amount. NSSF on annual basis pays interest on member funds.
The interest is as a result of income earned through several investments by NSSF.
If the defaulting companies were to pay the amount due, they have to have to add the interest accrued annually for each member. This amount cannot be waived.
NSSF has an asset base of Shs6.6 trillion.