NEWS

NSSF to remain sole custodian of workers’ savings – Cabinet

Managing Director National Social Security Fund – NSSF, Mr. Richard Byarugaba

Cabinet has approved the amendment of the National Social Security Fund (NSSF) Act, including among other things, maintaining the Fund as the sole recipient of mandatory contributions of all workers in informal and formal sectors.

The new amendments, which were approved in a Monday Cabinet meeting, also allow NSSF to lend to government while the NSSF Board has been given the discretion to use in-house expertise and fund managers in the investments of scheme funds.

Gender minister Janat Mukwaya told journalists in Kampala on Tuesday that the decision by Cabinet to retain NSSF as the sole recipient of mandatory contributions of workers was informed by the fact that opening up mandatory contributions to competition would complete the surrender of both the banking and non-banking financial sector to foreign capital because indigenous firms will have a very limited role to play.

“Cabinet also argued that NSSF has demonstrated steady progress in its performance, with its total assets today standing at about Shs9 trillion,” Ms Mukwaya said.

The ministers also argued that across all the countries in Latin America and Central Europe that liberalized the fund, the number of workers covered by a pension scheme declined. This was majorly because the private pension schemes were mainly interested in recruiting workers whose wages made profits for sponsors and fund managers.

Labour minister Janat Mukwaya said Cabinet decided that NSSF has demonstrated steady progress in its performance, with its total assets today standing at about Shs9 trillion.

The Cabinet position, therefore, renders the Retirement Benefits Sector Liberalization Bill 2011 before Parliament Irrelevant.

She added that Cabinet also resolved to amend the NSSF Act to provide for mid-term access of voluntary benefits on such terms and conditions that may be set by the Board.

The minister also said the NSSF Board shall also comprise government representatives, employers’ representatives and workers representatives.

She added that Cabinet also resolved to amend Section 7 of the Act to provide for mandatory contribution of all workers regardless of the size of their enterprise. Furthermore, provision should be made for voluntary contribution by workers over and above their mandatory contribution and voluntary contributions by self-employed persons. Consequently, all employers registered under the Companies Act, Partnership Act or any other law for the time being in force governing the establishment of business entities should be specified as persons who shall register as contributing employers.

Minister Mukwaya said Cabinet also agreed to amend the Act to provide that an employer who fails or refuses to remit contributions within the prescribed time may have the business managed by a third party.

“Accordingly, recovery of NSSF contributions shall have priority or ranked pari passu in any instance where property of an employer is seized or sold or otherwise realized in pursuance of an order of attachment in execution of a decree issued by a competent Court,” she said.

Cabinet also agreed that sections 44 and 45 of the Act be amended by increasing the fines for offences under the Act from ten thousand shillings to fifty currency points or imprisonment for a period not exceeding six months or both.

Cabinet also agreed that the NSSF Act should be amended to give the minister power to provide, by Statutory Instrument, a threshold of expenditure by the Fund prior to approval of the annual budget by the minister.

They also agreed that NSSF act be amended to provide for the exclusion by a statutory instrument issued by the minister the process of acquiring assets for purposes of earning income or capital appreciation from the application of the Public Procurement and Disposal Act as well as appraisal by the Solicitor General and Government Valuer.

Cabinet has authorized the Parliamentary Counsel to draft the National Social Security Fund Amendment Bill, 2018 in accordance with the approved principles.

Cabinet has authorized the Parliamentary Counsel to draft the National Social Security Fund Amendment Bill, 2018 in accordance with the approved principles.

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