The National Social Security Fund (NSSF) recorded a 25 per cent increase in comprehensive income for FY 2020/2021 from Shs 1.472 trillion in 2019 to Shs 1.84 trillion despite the adverse effects of the COVID-19 pandemic on the economy.
While releasing the fund’s financial performance in Kampala on Thursday, the executive director of NSSF, Richard 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.
“The socio-economic effects of the COVID-19 pandemic are still wreaking havoc on economies across the globe, and most businesses may take several years to shake off the effects of COVID-19. Nonetheless, our performance shows that the Fund is not only resilient but can absorb such shocks and continue its growth trajectory,” he said.
Results released by the fund also show that its assets under management increased by 17 per cent from Shs 13.3 trillion to Shs 15.5 trillion as of June 30, 2021, mainly driven by increased contributions and interest income despite an increase in Benefits paid out.
Member contributions also increased by 8 per cent from Shs 1.27 trillion in 2019 to Shs 1.37 trillion in FY 2020/2021 with this growth being attributed to the recovery of some employers that have benefited from the fund’s amnesty that was offered to businesses that were affected by the COVID-19 pandemic in the previous year.
The amount of money paid out to qualifying members also increased by 29 per cent from Shs 496.4 billion in 2019/2020 to Shs 642.3 billion in 2020/2021. This growth is attributed to an increase in number of claimants and the introduction of invalidity benefit payments for COVID-19 patients where Shs 2 billion were paid to 60 claimants under the COVID 19 benefits claim.
Byarugaba assured NSSF savers that the fund 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 enactment of the NSSF Amendment Bill.
Speaking about the NSSF Amendment Bill, Byarugaba said that the fund is well-positioned to implement the new provisions once they become law.
“We have been preparing over the last one year when it became clearer that the bill would be passed. We have solutions for the changes on the horizon, for instance, mid-term benefits including mid-term access, expansion of coverage to include the informal sector, and expansion of the voluntary space. We have built a very dynamic institution that can adapt, embrace these changes and thrive,” he said.
He played down expectations of a very high-interest rate but said the fund will keep its promise to pay a competitive rate, higher than the 10-year average rate of inflation plus 2 percentage points.
“Our performance demonstrates that we are creating value for our members even in a very difficult economic environment and this value will be reflected in the return the minister of Finance, Planning & Economic Development will announce next week.”
The minister of Finance Matia Kasaija will announce the new interest rate on members’ savings at the Annual Members Meeting which will take place on 29th September 2021.