The fund has reported an 8% increase in member contributions for FY2020/21
Kampala, Uganda | THE INDEPENDENT | The National Social Security Fund will easily achieve its Shs 20 trillion asset under management target for 2025 once the NSSF Amendment Bill is passed into law, the fund’s executives say.
The bill is currently in Parliament after being returned by President Yoweri Museveni for the members to debate and consider several provisions.
NSSF Managing Director, Richard Byarugaba, said during the release of the FY2020/2021 in Kampala on Sept.23 that the fund is well positioned to implement the new provisions in the bill.
“We have been preparing over the last one year when it became clearer that the bill would be passed,” he said.
He said, the fund has solutions for the changes on the horizon namely, mid-term benefits including mid-term access, expansion of coverage to include the informal sector, and expansion of the voluntary space.
These proposed changes, he said, are expected to add new members that are currently locked out of the fund because of the current law but also boost monthly collections.
“We have built a very dynamic institution that can adapt, embrace these changes and thrive,” Byarugaba said.
The fund’s comprehensive income for the FY2020/21 increased by 25% from Shs1.472tn to Shs1.84tn, despite the effects of the COVID-19 pandemic.
Byarugaba attributed the increase to growth in interest income largely attributed to the increased return on treasury bonds in the fixed income portfolio, dividend income and property sales.
He said the performance demonstrates the fund’s ability to withstand shocks occasioned by a stressed economy and an uncertain business environment in the era of COVID-19 pandemic.
“Last financial year was a difficult one but the fund demonstrated resilience,” he said. “It also shows that the fund can absorb such shocks and continue its growth trajectory,” he said.
The economy suffered from bad growth recorded at 3% in FY2019/20 and somewhat improved to 3.3% in FY2020/21. This growth rate is lower than slightly over 5.5% average growth rate recorded for a few years before 2020/21.
Meanwhile, the fund’s assets under management increased by 17% from Shs13.3tn to Shs15.5tn as of June 30, 2021, mainly driven by increased contributions and interest income despite an increase in benefits paid out.
Member contributions increased by 8% from Shs1.27tn to Shs1.37tn in the period under review.
Byarugaba said that despite recorded job losses in some sectors of the economy, many employers show encouraging signs of recovery.
He said, the fund saw recovery of most employers that benefited from the amnesty they offered to businesses that were affected by the COVID-19 pandemic the previous year.
The amount of money paid out to qualifying members also increased by 29% from Shs496.4bn in 2019/20 to Shs642.3bn in 2020/21.
The growth is attributed to an increase in number of claimants and the introduction of invalidity benefit payments for COVID-19 patients, Byarugaba added. The fund paid out an estimated Shs2bn as invalidity benefit payment for COVID-19 patients.
The fund was able to serve members by spending less. Cost of administration improved from 1.20% in 2019/2020 to 1.03% in 2020/2021.
Going forward, Byarugaba said, NSSF management is committed to creating value over the long term, while remaining dynamic enough to respond to members’ needs in the medium term, especially with an enabling legal regime upon the enactment of the NSSF Amendment Bill.
2020/21 interest rate
Finance Minister Matia Kasaija is expected to announce the new interest rate on members’ savings at the annual members meeting on Sept.29.
Byarugaba said, the 2020/21 performance demonstrates that the fund continues to create value for the members even in a very difficult economic environment.
He said, this value would be reflected in the return that the minister would announce.
Byarugaba said, fund, amidst a tough economic environment would keep its promise to pay a competitive rate, higher than the 10-year average rate of inflation, plus 2 percentage points.
2020/21 performance summary
- Assets under management increased by 17% from Shs13.3tn to Shs15.5tn
- Total comprehensive income increased by 25% from Shs1.472tn to Shs1.84tn.
- Member contributions increased by 8% from Shs1.27tn to Shs1.37tn.
- Benefits paid to qualifying members increased by 29% from Shs496.4bn in 2019/2020 to Shs642.3bn in 2020/21.
- Cost of administration improved from 1.20% in 2019/2020 to 1.03% in 2020/2021