The Independent Uganda: You get the Truth we Pay the Price
Why didn’t you sensitise the clients on the oncoming proposed law? Where is the input of the workers union?
It is important to point out that the amendment of the NSSF Act has been a protracted matter, and all key stakeholders including workers representatives have been involved in the process.
The sponsors of the Bill, the government, specifically the Ministry of Gender, Labour & Social Development consulted widely before drafting of this Bill.
However, the legislative process still gives an opportunity for any individual or group to provide their view to parliament, in this case the Gender and Social Services Committee of Parliament which may be incorporated.
In fact, I believe that the committee will invite the workers to give more input at committee level and I encourage them do take this opportunity and be heard by Parliament.
Workers union has always argued that there’s need for the contributors to access at least 30% of their savings to cater for viable investments while still in their prime ages. Has this idea now been dropped?
The idea of midterm access has not been entirely dropped. NSSF members don’t have to wait until they are 60 years. The proposals, specifically Clause 10 of the Bill, provides that “A member who has made voluntary contributions to the Fund shall be allowed midterm access to his or her benefits on such terms and conditions and in a manner prescribed by regulations.”
In other words, members who contribute voluntary contributions will access midterm benefits, as will be prescribed by the regulations to be issued by the Minister.
The issue of midterm benefits for mandatory contributions is a matter for Parliament that will have to decide and we shall await that guidance in the final Bill.
However, they will need to be cognisant of the fact the essence of social security is to prepare for a rainy day – that they can loss of income as a result of incapacitation, old age, retirement among others.
If you can still earn income, and you then use your social security savings, what happens when you lose the capacity to earn income? In addition, the country needs to rethink our savings culture. An employee’s NSSF contribution is just 5% of their monthly income, if he or she saved an addition 5% or 10% elsewhere, we would not see the need for access before retirement.
Over and again, NSSF has always claimed that it will penalise employers who do not remit their employees’ contribution to the Fund. But no firm has been prosecuted or their directors arrested for failure to adhere to the law yet the vice still continues in a number of companies. Why has this been the case and how will this proposed law change that trend?
That is not entirely correct. Over the last two years, we have prosecuted about 174 cases and through the court process and recovered over Shs17.8 billion.
Prosecution of employers is our last resort because we emphasise continuous engagement through our Relationship Management Business Model. We would rather first talk to the employer, understand their challenges and agree a payment plan, what we call a Deed of Settlement, that does not take them out of business.
This approach has been successful for the Fund and welcomed by employers because of the flexibility it offers. For instance, since July 2017 to date, more than 380 employers have signed Deeds of Settlement with us, and through these, we have recovered over Shs 13 billion. That’s the current approach.
The better news is that the proposed amendment will give the Fund more powers to prosecute and recover arrears from defaulting employers.
Under the Bill (when it becomes law), the Fund will be empowered to recover arrears from third parties who owe money to the contributing employer who is a defaulter.
The proposed amendments also increase the fine and imprisonment from just ten thousand shillings or imprisonment not exceeding 6 months or both to five hundred currency points and imprisonment not exceeding one year or both.
The Fund will therefore have more powers to recover arrears and the defaulters will also personally suffer heavier sentence.
Last word to the contributors?
I would like to urge all NSSF contributors and the general public to support the Bill because it is a better alternative to the current law. Where they would like to see changes, now is the time to engage their Members of Parliament, the Committee of Parliament to give their input. Workers should not lose this chance to have a legal regime that gives the Fund flexibility to innovate new products, invest quickly and prudently and keep up with developments in the social security sector.
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