At least 53 per cent of retirees, depleted their National Social Security Fund (NSSF) benefits within a year after getting paid a new report has revealed. Last year, NSSF conducted a survey among the beneficiaries to compare their quality of life before and after receiving NSSF benefits.
The results were shocking; some retirees who had worked for many years found themselves still suffering and cashless and with no tangible sustainable assets within a year. NSSF managing director Richard Byarugaba revealed recently in Kampala that 53 per cent retirees said that their benefits sustained them for less than a year and by the end of the first year, 98 per cent had no cash left.
Byaruhanga attributed this to lack of proper planning; “We know that the story would be different if they had planned well and had sought professional advice.”
Any employee (public or private) of or above 16 years and below 55 years is eligible to contribute to NSSF. The employee contributes 5 per cent while the employer contributes 10 per cent of ones salary. If the employer so wishes, they can contribute all the 15 per cent.
Private sector employees who contribute to NSSF are entitled to age benefit, withdrawal benefit, invalidity benefit, emigration grant or survivor’s benefit. Public servants are only entitled to age and survivor's benefits.
According to the findings of the Fund’s survey, most retirees invest their pension in agriculture, business, land, rentals, cows, further education, school fees, medical bills or fixed deposits to earn an interest.
“NSSF members to sustainably benefit from their savings, they must plan and seek expert advice, lest they lose all their life savings because of ill-advised and poor decision-making,” he said.
On this note, NSSF will hold an investment and wealth management symposium that will bring together financial advisory and investment experts from within the East African region to promote professional financial and investment decision making.
The symposium set for June 10 at Kampala Serena hotel, will also equip participants with knowledge to enable them plan for their retirement better by managing their personal finances well to make informed choices about financial products and investment said Byarugaba.
“Making better investment decisions will ensure retirees do not end up being destitute or dependent after receiving their pension. Whereas many of our members invested their money gainfully in business, there is a general lack of knowledge on business management and opportunities that can generate earnings to cater for their cash flow needs,” Byarugaba said.
According to NSSF, building and improving homes is the most expenditure line NSSF beneficiaries plan to invest their benefits; those contribute to 45 per cent.
“We also found out that 56 per cent of Ugandans get financial advice from a household member or relative, this could be not good because some could be bad financial advisors,” Byaruhanga said.