New mid-term rules await NSSF savers

When President Museveni on Wednesday endorsed mid-term access for National Social Security Fund (NSSF) savers, he left open the most pressing issue: When do eligible members get the money?

The answer to that question is a winding process: The President has to return to Parliament for reconsideration the NSSF (Amendment) Act, the House reprocesses it in accordance with its bureaucratic timeline 45 days or more and the revised or unaltered version is sent afresh for the President’s signature.

If the President assents, the Finance minister has to issue a statutory instrument prescribing the regulations and procedure that eligible NSSF members have to follow in accessing up to 20 per cent portion of their savings, according to officials familiar with the process.

The elaborate outline works, but only if there is no hiccup.

The stakeholders’ meeting at State House on Wednesday chaired by President Museveni agreed that only savers aged 45 and above and who have saved with NSSF for at least 10 years are eligible for mid-term access, contrary to the position of the 10th Parliament that enacted the Act in February 2021.

The parliamentarians enacted that a member of the Fund is eligible for mid-term access if they are either aged 45 and above or have saved for a decade. 

More than 60 per cent of those lawmakers lost the January election and their successors will likely require more time to acclimatise with the contentious issues or could even introduce new provisions while scrutinising the returned Act. That will delay the re-enactment of the legislation and, with it, mid-term access.

One possibility is that the 11th Parliament could accept and pass the State House meeting recommendations. Or, they could reject the proposals and pass the Act with the impugned provisions in Section 24A (2), setting the stage for a stand-off with the Executive.

If the President declines to sign a second version of the Act and members of Parliament enact it a third time, it will become law without presidential assent --- but this is an unlikely scenario with the NSSF (Amendment) Act where the area of discord is limited.

The outlined processes notwithstanding, some anxious members yesterday knocked at NSSF offices to check on the possibility of getting their money, prompting managing director Richard Byarugaba to convene an emergency press conference in Kampala to clarify the grey areas.

Like Finance Minister Matia Kasaija, MD Byarugaba has been opposed to mid-term access, which both argue would erode the Fund’s capital base and investment portfolio and shrink future earnings and interest for members.

In yesterday’s press conference, he suggested eligible savers may encounter certain conditions --- expected to be inked in the regulations to clothe the Fund against possible risks --- while accessing the money.

A regulation is derived from a law to give clear guidance on how the process will operate.

One proposal on the cards, insiders say, is to cluster and prioritise the pay-out according to groups whose qualifications may include age, health status and the amount of gross savings.

According to Mr Byarugaba, one of the agreed guidelines is for eligible members to access the 20 per cent benefits in a lump sum.

“That is one of the compromises we reached with the President because you do not want somebody to say that today I will take 5 per cent, and tomorrow 15 per cent, it will be very difficult for us to plan. You can withdraw up to 20 per cent. If you choose five per cent, that is it, your chance of withdrawing under the benefits is gone,” he said.

If the law is passed and signed on schedule, and the minister issues the regulations promptly, NSSF management said the earliest any eligible member can get part of their savings under mid-term access would be in October in part because “the Fund needs to adjust its system”.

“The current process cannot permit us to implement a mid-term access as provided for [in] the policy. The changes we need to make are on the system, the changes we need to make cannot be made on our current system. We are in the process of changing the system,” Mr Byarugaba said, “Our target is to do that by the beginning of October. It looks like we will be ready to implement the changes by latest end of October.”

The Fund is also set to make proposals to the parent ministry, in this case Finance, for eligible members to give a three months’ notice before their benefits are paid.

According to NSSF MD, they will require Shs1 trillion to pay the first 100,000 qualifying members who meet the additional conditions in the regulations.

The Fund has also proposed to stagger the payment once the Finance minister prescribes the different priority recipient categories.

“Within the regulations that are going to be set up by Finance (ministry), we believe that the minister will allow us the flexibility not to pay out all these monies in one go; so, if people apply for them, there might be a criteria for those we pay first,” Mr Byarugaba said.

he added that the numbers of the Fund members are always changing and they, after the initial pay-out, require Shs200b annually for the mid-term access.

Members will be paid as and when they meet these and other conditions, the MD said, insisting that the pay-out will affect the operations of the Fund, and the interest earned on the savings.

President Museveni, while endorsing the Act on Wednesday, likened himself to Biblical king Pontius Pilate and exonerated himself of future responsibility, saying:

“You remember Shakespeare’s play, The Merchant of Venice? Shylock with his ‘my pound of flesh whether you die or what’! For the NRM not to be that Shylock and since these people (workers) think this is the solution, let’s go ahead. If it doesn’t work out, we shall see…learn together instead of being like Shylock. You go, I wash my hands. I have become Pontius Pilate!”

 Shylock is a fictional character in William Shakespeare’s play, The Merchant of Venice, a Venetian Jewish moneylender. A younger Museveni, while student at Ntare School, acted in the play.

Mr Byarugaba said the regulations should consider the impact of a huge cash outflow as well as guide the process the beneficiaries will follow to access the benefits.

“We need to begin preparing for that liquidity. It means relooking at our asset allocation strategy. We have been allocating our investments for the long run, but we might look at bringing down our term, the period in which we invest,” he said

He added: “Those regulations have to take into consideration the constraints the new law might create especially with regards to our investments in some of our current existing obligations. In there we can put the procedures, we need to find a procedure to help us [to] minimise the risk.”

Nssf objectives

1. Identify the needs and problems of the community and involve them in problem-solving.

2. Develop among themselves a sense of social and civic responsibility. Responsibility. Utilise their knowledge in finding practical solutions to individual and community problems.

3. Utilise their knowledge in finding practical solutions to individual and community problems.

Some of the criteria

Eligible members to give three months’ notice prior for claim.

Payment to be effected in lump sum.

A member who picks less than 20 per cent loses right for additional claim.

Payment to be based on priority groups clustered by minister.

First pay-out, at the earliest, in late October.

Other provisions in the Act

• To provide for mandatory contributions of all workers regardless of the size of the enterprise or number of employees

• To provide for voluntary contributions to the Fund;

• To empower the Fund to recover from a third party any sum owed to a defaulting contributing employer to cover any contribution, penalty or interest;

• To provide for a five-year tenure for the managing director and deputy managing director;

• To empower the Minister to prescribe a threshold of expenditure by the Fund

• A member may make voluntary contributions to the Fund over and above their standard contributions.

• All employer contributions to the Fund shall be exempt from tax.

• The investment income of the Fund shall be exempt from income tax.

What they say about the 20% NSSF MONEY

Christopher Mugwanya, teacher.

“I save with NSSF, but I do not know how much I have saved with them. If I get the money, I will invest in business. I want to use it when I am still energetic rather than when I am worn out.’’

Winifred Luutu, banker.

“Forty-Five years to access that money is rather too far. We should get it when we are younger so as to improve our cash flows because this is the time we should be investing in our retirement.’’

Eridadi Kategaya Muhumuza.

“I worked with Sadolin Paints in the 1970s. I saved close to Shs15m, but when I went to check in the 1990s, I was told that during currency devaluation, I was left with Shs150,000. I decided to donate to NSSF.’’

Francis Kibalama, ICT officer.

“Twenty per cent payment is too little, I have four years left to hit the 45 years and I will have saved Shs45m. What will Shs8m do to me? It does not make sense.’’

Alice Mukisa, teacher.

“I would invest it in rentals. I do not know how much I have saved so far, but I know that my employer keeps remitting the money every end of month because I see it from my payslip.’’

James Wazimbwa, 50-year-old.

“I have not heard about accessing the money at 45 years. Why should I withdraw the money at that age. I am going to put it to waste. I will wait for retirement age to access all my money.’’

Paul Kamoga, office messenger.

“I have been saving for the last 30 years with NSSF. I think I have about Shs25 million. Twenty per cent means about Shs5 million, I will use it to build a house in the village.’’

Deogratius Nteziryayo, office messenger.

“I qualify for the money because I have been working for more than 20 years. I think I have saved over Shs25m. I will use the money to buy a piece of land.’’

Winifred Karubindi, office assistant.

“I started working 31 years ago and I have saved about Shs27 million. I have many things I need to accomplish, including buying a piece of land. I would prefer getting it all in a lumpsum.’’

Menai Ssentongo, 60-year-old.

“I have many things to do including constructing houses for getting rent during retirement that is a very good venture. Twenty per cent for the beginning is good.’’