Parliament’s approval of the National Social Security Fund (NSSF) Amendment Bill 2019 into an Act of Parliament allowing workers to access part of their savings at the age of 45 has brought some cheer to NSSF savers.
Parliament amended Section 24 of the existing Act by inserting Section 24a, which allows workers mid-term access to their savings. The Act now awaits presidential assent.
Workers who have saved with the Fund for 10 years, will be able to access up to 20 per cent of their savings. Indeed, this is a step in the right direction as it allows savers to invest and grow this money before they eventually retire.
The decision to allow members access part of this money comes at a time when the Covid-19 pandemic has wreaked havoc on peoples’ income, making it difficult for others to contribute to the Fund.
Of the two million Ugandans who regularly save with the Fund, 100,000 dropped off last year because their employers were either going through financial distress or had closed business altogether as a result of the Covid-19 pandemic.
Mid-term access will also allow savers to diversify their savings. Diversification is a risky strategy where money is spread out across different assets so that the risk in your investment portfolio is reduced.
The beauty with diversifying savings is that it can eliminate risk from market volatility, giving you an opportunity to make capital gain with one asset class even while another declines.
An NSSF saver’s money could be the line between some people’s poverty and wealth. This is a welcome move because it will allow savers to invest part of this money when they are still productive and energetic.
It is also envisaged that there will be more liquidity in the economy and improved consumer demand. More so, banks will have some bit of competition since there will be liquidity without cost.
Now that some savers are one step closer to accessing part of their money, we ask NSSF to simplify the process of acquiring the saving considering that there have been cases where members have waited for years long after retiring before eventually accessing their saving.
We believe that the President will assent to this Bill to enable it to be implemented.
It is imperative that we strive to make the Fund work for NSSF savers before they actually retire. This will allow them to invest the money in productive ventures when they are still strong. Indeed, mid-term access is just one of ways to achieving this end.