Museveni decision on NSSF cash out in two weeks

Thursday July 22 2021
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A provision under which certain members would access at least 20 per cent of their benefits before hitting the required retirement age, had been considered under the amended NSSF Act but the Bill. PHOTO/FILE

By Elizabeth Kamurungi

President Museveni has deferred the signing of the National Social Security Fund Amendment Bill, 2019 due to conflicting information from the Fund and the workers’ representatives.

The President yesterday met with workers representatives, NSSF managing director Richard Byarugaba, Finance minister Matia Kasaija, Minister for Gender Betty Amongi, and other officials to discuss the Bill for a way forward.

The hopes for progress, however, hit a dead end after Mr Museveni cited anomalies in the figures and wording of the Bill, causing him to push for another meeting next month.

According to a statement from State House, the President queried the conflicting amount required for the pay out that the two sides presented.

Sources, who attended the meeting, told Daily Monitor that in their position paper, workers representative led by Bubulo West MP Peter Werikhe said the Fund will need Shs800b. 

“The President said he wants to do more research on the figures after the workers’ representative said Shs800b was needed for the mid-term access, while NSSF’s Byarugaba said they may need up to Shs3 trillion,” a statement from State  House read.

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“Let us give ourselves two weeks and conclusively solve this matter. I want to be clear with the figures. I am going to do my own research. Let us meet on August 4,”  the President said.

According to Mr Byarugaba, the Fund is now valued at Shs15 trillion.

The Bill, granting contributors who have clocked 45 or saved for 10 years access to 20 per cent of their savings, has been stuck in the President’s hands awaiting his signature after it was passed by the 10th Parliament in February.

The chairman of the National Trade Unions (NOTU),  Mr Wilson Owere, accused the Fund of exaggerating the figure.

Disagreement on payout figure

“The only issue we had was the amount of money because NSSF presented a figure which was higher but we had facts about the figure, our figure is Shs800b. We have classified people who have reached 45 and have worked for 10 years,”  Mr Owere said.

“Those who are holding above Shs10m are 62,000. When 20 per cent is allocated to them, they will take about Shs36 billion. Those between Shs10m and Shs100 million are about 35, between Shs100m and Shs500m are 9,000, those above Shs500 million are 840,” he added.

President Museveni’s skepticism about assenting to the Bill came to the fore during the Labour Day celebrations in May when he called for further discussions to ensure that allowing access to 20 per cent of accumulated savings and interest by NSSF savers will not affect the percentages of interest that the body offers savers. 

This still remains a prohibitive point for the President, according to yesterday’s meeting.
“As long as you can explain to them… that when you take Shs5m today, you lose Shs30m in 20 years. Also, what happens to the Fund?” Mr Museveni asked.

Breakdown
“Each worker saves for between 25 and  30 years and earns Shs150m. He said if they access their savings now, they lose up to Shs30m in 20 years.  He also said the Fund would lose money because it would offer securities at a discount in a fire-sale,” a statement from State House quoted Mr Byarugaba,

Mr Owere said this would be explained to their members, who at the time are battling hurdles birthed by the Covid-19 pandemic.  

“The President was probing about the interest, if it will be reduced and we explained that it will, but we are saying that we can explain to the workers. He was worried that the interest [earned] will go down and it will also affect NSSF. But when we came out with the figure to be withdrawn, which we are also saying it will not be at the same time,” he said.

The wording those to access the money also caused contention. 

The Central Organisations for Free Trade Unions representative, Dr Sam Lyomoki, said while they had agreed with the NSSF that only workers who are 45 years and have saved for 10 years be allowed mid-term access, the Bill, however, grants access to those who are 45 years or have saved for 10 years.

“When we talked about mid-term, we met with all the stakeholders, including NSSF. Workers who have reached 45 years and have contributed for 10 years are 100,000 that is about Shs800b. Parliament instead said 45 or 10. At 45, many people have challenges,”  Mr Werikhe said.

Mr Owere, however, expressed optimism that the Bill would be assented to after the required adjustments.
“It was agreed that the President after listening to both parties, we convene another meeting on August 4 once we have all those adjustments, then he can sign it. We have in principle that he is going to sign the Bill,”  he said.

Contentious

The Bill, has since its introduction, caused a push and pull between workers and the Fund as well as the Minister for Finance. Mr Kasaija in a March letter advised the President against signing the Bill, saying the Fund did not have sufficient funds and the payout would require the Fund to sell off its assets.  

President Museveni, however, tasked the Ministry for Gender Labour and Social Development to engage the workers for a harmonised position. The engagement resulted in yesterday’s meeting.

The Constitution provides that the President shall within 30 days assent to the Bill or return it to Parliament  for reconsideration or amendment.

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