Finance, Gender committee members support mid-term access to NSSF savings

Kampala, Uganda | THE INDEPENDENT | More than half of the members of a joint committee that is scrutinizing the NSSF Amendment Bill have supported a provision that calls for midterm access to National Social Security Fund savings.

The committee comprising legislators from the Finance and Gender committees, is currently reviewing the Bill, which, among others, seeks to amend the NSSF Act, to change the taxation regime for social security contributions investment returns and benefits, introduce voluntary contributions over and above the standard contribution of five per cent and allows midterm access to voluntary contributions.

At least 17 of the 23 members of the committee that talked to Uganda Radio Network are in support of the provision for midterm access. The committee has a total of 40-members.

Finance Committee chairperson Henry Musasizi says that once approved, voluntary savers will then be able to get a portion of their benefits before turning 55, the official age for which savers can claim their benefits, under the current law.

Musasizi, however, adds that the committee is equally open to a proposal to allow members who have saved with NSSF for at least 10-years or those aged 45-years and above, to access their benefits. The proposals were fronted by the Central Organisation of Free Trade Unions-COFTU and the National Organisation of Trade Unions-NOTU.

The unions argued that out of the 1.2 million savers, 11 percent (131,443) are aged between 45 to 55, implying that, if this particular age group got 20 per cent of their benefits, the fund would pay 678 billion Shillings or utmost 1 trillion Shillings if they took 30 per cent of their total savings which stand at 3.3 trillion Shillings. The age group accounts for 31 per cent of NSSF’s current total assets of 11.1 trillion Shillings.

Kumi County MP, Charles Ilukor equally endorsed the proposal, but noted the lack of adequate statistical evidence from NSSF and other stakeholders on the possibility or the impracticability of paying out midterm benefits for all savers or a select group of savers.

Legislators Francis Mukula, Agnes Kunihira, Sara Wekomba   and Amos Lugoloobi also argue that NSSF is able to pay midterm benefits to even mandatory members by setting up an enabling system.  Mukula specifically explains that such a system would help savers invest or use their midterm benefits when they are still energetic.

MP Amos Lugoloobi accuses the Ministry of Finance of opposing the provision for midterm access, for purely selfish reasons. He says that because NSSF is a key source of funds for government borrowing, the government fears that allowing midterm access would reduce the financial muscle of the fund to participate in regular Treasury bond auctions.

Lugoloobi adds that the proposal by workers to get at least 20 to 30 per cent of their benefits mid-term cannot result in a collapse of the fund.

However, Pakwach Woman MP Jane Avur and Luuka North County MP John Bagoole Ngobi opposed the provision for midterm access to savers, stating that members must endure and save to avoid old age poverty.

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