Savers shun NSSF mid-term benefit

Thousands of National Social Security Fund (NSSF) members who qualified for the mid-term benefit as of June 2023 opted not to claim their money, data from the Fund reveals.

Statistics indicate that 15,413 (62 percent) had their 20 percent of gross savings left at the Fund. 

Only 38 percent of qualifying members made claims for their savings in the year that ended June 2023, contrary to the immediate aftermath of the commencement of the payment of the benefit when thousands thronged NSSF offices to get the cash.

“More people have opted to leave their savings with the Fund…the number of people claiming their mid-term benefit last financial year 2022/2023 has reduced compared to the previous financial years,” a statement from the Fund quotes Mr Patrick Ayota, the managing director.

The NSSF Act as amended that came into force in 2022 allows for savers who have clocked 45, and have saved for a decade access to 20 percent of their savings. Persons with disabilities who are 40 and have saved for 10 years can access half of their gross savings.

Of 24,861 members who qualified as of June 2023, only 9,448 (39 per cent) withdrew their money.  Twice as many males claimed their benefits compared to females.

In the previous year, 2021/2022, a total of 21,598 qualifying members claimed Shs441.1b.
In total, therefore, the Fund has paid out Shs713.1 billion to 31,046 individuals since the mid-term benefit was sanctioned. 

At the commencement of the payouts in March 2022, a total of 41,174 contributors were eligible. These, the Fund estimated, would require 793 billion.

At the height of the amendment, former NSSF managing director Richard Byarugaba and Finance Minister Matia Kasaija opposed the mid-term benefits claiming it would eat deep into the Fund’s assets, stripping the now Shs18 trillion worth financial giant of long-term investment capital.

Proponents, however, argued that savers who had been battered by the effects of the Covid-19 pandemic needed to access their savings for reprieve. The pandemic, and consequent containment measures such as border closures, and curfew had affected businesses and livelihoods.

Ms Barbra Arimi, the head of marketing and communications at NSSF, attributed the trend to good financial performance of the Fund. 

“The trend is a demonstration of the confidence that members have in the Fund,” she said.
For over a decade, the fund consistently posted a double-digit interest for members, except for the 2022 when it fell to 9.65 percent.  

The interest rate for the 2022/2023 Financial Year will be declared on September 25.

Savers, the Fund reiterates, can assess the 20 percent in lumpsome whenever one meets the qualifications of 45 years and 120 contributions. 

Mid-term payments
Total amount paid: Shs713.2 billion
Total number of beneficiaries: 31,046

FY 2021/2022
Amount paid: Shs441.1 billion
Number of beneficiaries: 21,598

FY 2022/2023
Amount paid: Shs272.1 billion
Number of beneficiaries: 9,448 members