The Independent Uganda: You get the Truth we Pay the Price
By Richard Byarugaba
At the end of the 2009 fiscal year, the balance was Shs95 billion, by end of the 2011 it had dropped to Shs28 billion
Our attention has been drawn to recent press reports regarding Shs28 billion reported by the Auditor General as being held in a suspense account by the Fund. The insinuations that we could be underpaying members’ benefits or even ‘stealing’ these funds are outright falsehoods.
The Auditor General, for the first time in ten years, gave NSSF’s accounts an “unqualified” opinion, which is an indicator that the accounts reflect a true and fair view of the state of affairs of the Fund.
In his presentation to Parliament, he reported as follows: “As required by the Public Finance and Accountability Act, and National Social Security Fund Act, I report to you, based on audit that: Sufficient and appropriate evidence which was necessary for the purposes of the audit was obtained, proper books of account have been kept by the Fund, so far as appears from my examination of those books, and the Fund’s balance sheet and income statement are in agreement with the books of account.” The report is now a public statement that is available on our website.
It is important that our members and the general public understand the whole concept of suspense account. It is a common financial practice, that money that has not been posted to a final account can be placed into a temporary account, normally, referred to as a suspense account. This is practiced by banks and any quasi-financial institutions like pension funds. In our case, the monies held in a suspense account are those funds that have not yet been allocated. Not only is this a common accounting practice, but it is also provided for under the NSSF Act.
There are three reasons why funds may remain unallocated to members’ accounts. Firstly, some employers make lump sum deposits into the Fund bank account to cover their member contributions, without submitting a detailed schedule that has details of the individual contributors. These monies will sit in a suspense account until the detailed schedule of contributing members is obtained from the employer. When the schedule is received, the money is then transferred from the suspense account to the members’ accounts.
Secondly, there are a number of cases where we received payments without any documents to indicate who the contributions belonged to. Such payments may have originated from third parties, with no identity of the original employer. This category especially related to the privatisation exercise carried out by the Privatisation Unit (PU) under the Public Enterprise Reform and Divesture Act (Cap 98), (PERD Act) which had to wind up, merge and dispose of some government parastatals.
Lastly, the Fund also receives contributions from employers whose employees have not registered with us. Such funds cannot be allocated until the specific owners register and are given an NSSF number.
Over the last 18 months, our efforts to resolve the balances in the suspense account have been successful and commendable. At the end of the 2009 fiscal year, the balance in the suspense account stood at Shs95 billion. By the end of the 2011 fiscal year, the balance had dropped to Shs28 billion. We are working and expect to significantly reduce this balance by the end of this fiscal year.
It is a prudent practice that the suspense account balance is kept to a bare minimum. Indeed, in the spirit of increasing operational efficiency and accountability to all our stakeholders, we have undertaken a number of initiatives to ensure that all the monies that come into the Fund are immediately allocated and credited to member accounts.
For example, we have rolled out an electronic collection system that requires employers to concurrently submit an electronic schedule with a payment to our bankers. With the E–Collection system, the banks perform the first level of data verification as well as receiving employee schedules. So far 75% of employers are using the new system.
Given the background above, it is important to understand that dealing with suspense requires the cooperation of employers and employees. It is an obligation of the employers to remit contributions of their employees on time and furnish the Fund with the full details of the contributing members. Employees also have a duty to obtain their statements, review and notify the Fund of any discrepancies and missing contributions. When properly done, our duty, as a Fund, is to credit the accounts of members as soon as possible.
In fact, many of the challenges that our stakeholders face, while dealing with us, such as delayed benefits claims payment, can be simply dealt with if we (the Fund, employers and employees) fulfilled our obligations.
We pledge to continuously improve efficiencies, innovate and automate processes in order to serve all stakeholders better.
The writer is the Managing Director/CEO of the National Social Security Fund
