NSSF, experts tell members to save beyond the 5% they remit monthly
Kampala, Uganda | JULIUS BUSINGE | Do you spend less and invest more of your income a head of your retirement? Will you have enough monetary resources upon retirement? Will there be any impact upon taking your retirement benefits?
These questions are among the highlights of the recent NSSF Money Talk symposium that was held at the Kampala Serena Hotel on June 10.
The NSSF Managing Director, Richard Byarugaba, told an estimated 900 members that “It has become increasingly clear, demonstrated by research, that for NSSF members to sustainably benefit from their savings, they must plan and seek expert advice to avoid loss of their life savings because of poor decision-making.”
He said it is on this basis that the pension fund has introduced a comprehensive financial literacy program – the first ever annual investment and wealth management symposium – that will be used as an avenue to urge members to save more, wisely.
“It is important to consume less and invest the balance,” Byarugaba said. “Don’t consult your family members or relatives; consult investment experts.”
The symposium aimed at encouraging the members to save beyond the 5% that NSSF takes from them every month so as to avoid expensive commercial bank loans in future.
Participants that The Independent spoke to said they learnt a lot though were not told on how to deal with the many competing priorities.
“I have learned a lot about saving. What they did not tell us is how to deal with the many responsibilities that take most of the money we earn monthly,” said a one Geoffrey.
“But what I can say is that, the speakers were good on telling us the value of saving and if I get the opportunity I will save more.”
“I have listened about the value of saving and realised that I am not doing enough. I will do more with my 95% earning that does not go to NSSF,” another participant identified as Olivier, said.
Byarugaba said that on average the Fund pays out Shs15million to each member at retirement – a figure he said is small – and calls for more saving beyond the mandatory NSSF percentage.
He added that on average each member of the Fund holds Shs50million on their account which he said is small for one to make meaningful investment after retiring.
Fund’s latest survey
The symposium comes a few months after the Fund carried out a survey which showed that out of the 402 respondents that were interviewed, 53% of them were found unable to sustain their saving for a year upon receipt.
In addition, 98% of the respondents had no cash left as at the end of first year and that most of the retirees were investing either in real estate or improving their homes.
Michael Mugabi, the managing director of the Housing Finance Bank said it is now possible for prospective home owners to own homes through mortgages, with a Shs1million monthly repayment period.
He said 61% of the working class people live in rented houses and that 90% of households live in a rented apartment for up to three years and then shift yet the amount of rent they meet monthly can enable them own houses through mortgages.
Aeko Ongodia, the founder and chief executive officer at Xeno Technologies, an investment advisory firm, said NSSF members need to seek expert advice prior to making investments in areas of real estate, government treasury bills and bonds, in equities and or companies listed on the stock exchange to avoid making losses and living a miserable life after retirement.
As at June 10, Byarugaba said, the Fund has Shs11.4trillion as asset base with a total of two million customers. However, only 800,000 members are active.