The advent of the novel COVID-19 and the subsequent lock down of nearly all sectors of the economy has seen a number of National Social Security Fund (NSSF) savers calling for the Pensions Fund to release at least 20% of their savings as financial relief for the tough economic times. In an interview with UBC TV, Richard Byarugaba, the MD National Social Security Fund (NSSF), assures savers of the Fund’s readiness to pay out the suggested 20% mid-term benefits that the public and parliament have been clamoring for. However, Byarugaba says the necessary legal framework to enable legally pay does not exist and as such his ‘hands are tied’ by the law.
In the UBC interview, during which he clarified about the many options available to make the payout and the resulting benefits, Byarugaba says lumpsum pay out would tremendously impact on the entire economy, the institution he leads would be able to immediately commence paying out the savers/members’ 20% the moment Parliament undertakes the necessary legislative interventions to alter the rules providing for such mid-term payments.
Byarugaba says plenty of conversations and feedback exchanges have been going on between the Fund management, employees on one hand and the rest of the stakeholders like the Ministry of Finance, Planning and Economic Development since the lockdown began. He adds that, consequently, the top leadership is fully aware of the extent to which savers have financially been squeezed into unprecedented economic hardship. He added that he is very sympathetic to the members but his hands are legally tied because, as a trustee of the funds, he can only act in ways that are prescribed by the relevant law or Act in its current form. He can only act according to what the NSSF Act is as opposed to what it ought to be.
We care about our members
As the public debate rages on, management has not been blind to the needs of the members wanting to be secured and that the fund has worked out how much it would cost paying out 20% to all their members to comply with the mid-term benefits that are being agitated for. Byarugaba discloses to the UBC interviewer that this would require Shs 2.6trn off the total savings of Shs13trn.
And this, isnt all. There is also another Shs800bn that must be paid out annually (on average) to members who qualify to get that payment on the account of age (clocking 55). This brings the total to Shs3.2trn which would have to be paid out to the saving fund members in one year. These combined are a colossal amount and would have an impact on the fund, which is why, in his last week letter to Finance Minister Matia Kasaijja as he prepared to go for the Parliamentary debate, Byarugaba exhibited caution about the impact paying out a lumpsum of so much money (Shs2.6trn) the resulting effects to the economy.
Let Parliament amend the law
As a way forward, Byarugaba maintains that the MPs have to expedite the reforms they consider necessary in the NSSF Act to enact into existence provisions that can make it possible for him to legally pay out the money to members whose interests, he says, he is here to serve as someone employed in the capacity of Managing Director. Currently, there is no legal provision allowing our members to access mid-term benefits, ”explains Byarugaba adding there is no way he ordinarily can stand in the way of his bosses (the members of NSSF) “to have a better life” the way some social media users have furiously portrayed him. “It’s such a difficult tragic moment and quite a number of our members have lost jobs.”
We have also provided waivers
The NSSF MD adds that because, as management, they empathize with those hurting as a result of lock down’s negative impact on economic activities, the constrained employers have been allowed a waiver on the mandatory monthly contributions for 3 months up to June. Indeed, many employer firms have successfully applied for a moratorium permitting them not to make monthly employee contributions up to the month of June (and this possibly could be reviewed depending on what the circumstances will be when that time comes).
Byarugaba also clarified on Section 25 of the NSSF Act which he says has been construed by many to fallaciously imply that the Finance Minister is permitted to create a window/exceptions by way of Statutory Instrument to authorize the NSSF management to make out mid-term benefits payments. He says nothing could be further from the truth. He states that the correct position of that legal provision is that the Minister can only exercise his powers, making adjustments on the payments to members, in relation to the three types of benefits the NSSF Act creates (and it has nothing to do with mid-term benefits of 20% ,stating that the Finance Minister can only exercise that SI mandate strictly in relation to invalidity, survivors/in case of the saver’s death and age-related benefits.
Anyone clocking 55 years becomes entitled to his/her savings and the exception therein is that at 50, a member can still legally access and get paid his/her savings upon proof that they have been out of active employment for at least one year. At 55 years, NSSF becomes obliged to release a member’s savings regardless of whether they have retired/stopped working or not.
NSSF is responsive
Byarugaba also uses the UBC interview to respond to critics who say NSSF management is opposed to the proposed 20% mid-term benefits payout because the money isn’t readily available. He explains that, because more than 70% of NSSF members or savers, are below 30 years of age, management rightly assumes they won’t require accessing or taking away their savings for the next 25 years implying this is money that can safely be committed into long term things (not near cash assets).
He categorizes these long term investments into three namely (a) treasury bonds, (b) equities/shares held in publicly listed companies [like Uganda Clays, Umeme, HFB etc] and real estate (the hardest to get cash back from). That being invested in such long term investments/assets , making money not to be readily available in cash form, doesn’t imply in anywhere that management has squandered or misappropriated members/savers’ money. It remains available and belonging to NSSF members but in long term assets and investments.
Byarugaba concludes that they are ready to mobilize and have the funds available to pay off the required 20% for members who wish to take a fraction of their savings once the legislature empowers them with the enabling legal enactments. He advises that paying out simply because there is public pressure, without any legal authorization, would not only be anomalous but it’s something over which NSSF bosses could be prosecuted for exceeding their powers (acting ultravires).
