NSSF pays savers 10.75% as gov’t rejects mid-term access

NSSF Managing Director Richard Byarugaba Kampala, Uganda | THE INDEPENDENT | Savers with the National Social Security Fund will get an additional 10.75 percent of the value of their total savings held as at July 2020 in form of annual interest.

This follows the surprise declaration of the interest rate for the year by the Minister for Finance, Planning and Economic Development Matia Kasaija Monday morning.

Earlier, the NSSF Managing Director, Richard Byarugaba had hinted that the interest rate for the year 2019/2020 would be less than 10 percent, following what he called a hard season. Analysts had predicted a 7% interest announcement, so Kasaija’s announcement of 10.75 came as a surprise to many.

The NSSF determines interest on the 10-year average inflation rate, on to which two percentage points are added to get the minimum rate to be offered.

The savings grew by just 5 percent, the lowest rate of growth in its history, to 1.28 trillion shillings.

Most of the fund’s investments, including savers’ contributions were affected by the global Covid 19 pandemic, which saw businesses struggle to remit workers’ savings.

The Fund allowed companies to defer remittances during the crisis for April, May and June as a way of supporting government’s interventions to combat the effects of the Pandemic. This means, it had to suspend collection of 22 billion shillings from companies that were deemed to be financially stressed.

The other areas affected were the investments both in Uganda and of the stock markets across the East African Community, as all the economies were almost equally affected.

According to the audited financial statements, Assets under Management increased by 17% from UGX 11.3 trillion to UGX 13.38 Trillion, as at end of June, 2020, mainly driven by increased contributions and interest income.

The pandemic also led to a cancellation of many planned activities by NSSF, and this led to a reduction the cost of administration.

Total Revenue increased by 17% over the year to 1.47 trillion shillings, driven by growth in interest income as a result of higher yields in fixed income investments like government treasury bills, as well as rental income.However, income that the Fund earns as dividends from investments in listed companies, reduced by 19 percent to 62 billion shillings, especially after the Central Bank directed commercial banks not to pay dividends during the pandemic.Companies, NSSF has shares in include Stanbic, DFCU, Baroda, Diamond Trust banks and NIC.The fund also says the money paid in […]

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