KAMPALA – Workers MP Sam Lyomoki has said described as alarmist, misconstrued and irregular claims by the NSSF managing director Richard Byarugaba that paying out 20% of savings to beneficiaries will cripple the social security fund.
In a May 12, 2020 letter to the Finance minister and copied to, among others, President Museveni, Dr Lyomoki said Mr Byarugaba’s arguments are not in tandem with the purpose for which NSSF was established.
“NSSF is a social security institution and therefore her core mandate is social protection and so our argument for midterm access is scientific and in tandem with the ILO Social Security (Minimum Standards) Convention, 1952 (No. 102),” the letter reads in part.
According to Dr Lyomoki, Mr. Byarugaba deliberately premises his analysis on a wrong assumption that the proposal for midterm access is for an unconditional 20% drawn down at a go on the about 13 Trillion portfolios of the Fund translating to about 2.6 Trillion.
Below is the letter by Dr. Sam Lyomoki
The right position on the proposed midterm access by NSSF savers
What does the proposal for midterm access entail?
Fellow citizens in the next few days, and as guided by the Right Hon Speaker, Parliament has to pronounce itself on the question of allowing savers under NSSF a small part of their savings.
We are not talking of these savers accessing government or someone else’s money but their own money earned in sweat and blood.
We are not even talking of them accessing all but a very small portion of their money, actually as small as less than 20% of it.
And again, we are not saying that everyone saving with NSSF shall automatically qualify for this money but those who wish to and who must be 45 years of age and above or have saved for at least for 10 years if they are not yet 45years of age.
Our analysis shows that as of March 31, 2020, NSSF had a total member portfolio of 11.4trillion.
There were about 150,000 members between 45 and 55 of age and holding approximately3.7 trillion shs, 20% of which amounts to 740 billion shs.
Subjecting this to another condition “of at least 10 years of savings”, reduces the exposure to almost that number almost half, i.e. about 370billion shs.
The Fund can carry out an actuarial study now and handle this.
The Audit Report of December 2019 showed that if the Fund was to pay out 20% of members of 45 years, it would spend 300bn, which is affordable as the Fund collects over 100bn a month.
To avoid the Fund running out of money we have further proposed many other safeguards that include liquidity or availability of cash with the Fund and the technical veto by the management of the Fund in accordance to guidelines approved by the Board and the responsible government ministry.
Misleading, irregular and alarmist missive by NSSF MD
The processing of an amendment to the law to make this possible started long before our current COVID19 challenge and our cry now is that this can no longer wait.
However, there is now a misleading, irregular, alarmist, dishonest and unprofessional letter by the Managing Director of the NSSF Board, Richard Byarugaba, written to the Minister of Finance Planning and Economic Development, against the same. In this letter and in an obvious attempt to negatively bias decision, Mr. Byarugaba deliberately premises his analysis on a wrong assumption that our proposal for midterm access is for an unconditional 20% drawn down at a go on the about 13 Trillion portfolios of the Fund translating to about 2.6Trillion.
Obviously, such a reckless irresponsible proposition would be untenable due to lack of liquidity and would also lead to serious ramifications both to the members and the financial systems as ably and correctly articulated in his analysis.
However, that misleading approach is not what our midterm proposal seeks. Our midterm proposal has considered this especially the numbers regarding savers 45 years and above of who have saved for at least 10 years as already analysed.
We note that Mr. Byarugaba’s analysis deliberately ignores this, and the previous discussions, concessions and proposed safeguards relating to the proposed midterm access. Mr. Byarugaba even couldn’t bother to consult the Board given that his controversial stance now appears to contradict the official position of the Board.
NSSF is a social security institution and therefore her core mandate is social protection and so our argument for midterm access is scientific and in tandem with the ILO Social Security (Minimum Standards) Convention, 1952 (No. 102).
The internationally agreed instrument, benchmark and minimum standard for the very basic social security principles, that establishes nine branches of social security to wit medical care; sickness benefit; unemployment benefit; old-age benefit; employment injury benefit; family benefit; maternity benefit; invalidity benefit; and survivors’ benefit.
In our case as Uganda, under the current National Social Security Fund Act, 1985, we have only 5 levels of benefits (i.e. age, withdrawal, invalidity, emigration grant, survivors’) that translate to only 3 (i.e. age, invalidity and survivors’) under the ILO standard.
The implication of this is that we are still to actualize the remaining 6 benefits i.e. medical care; sickness benefit; unemployment benefit; employment injury benefit; family benefit and maternity benefit.
Consequently, our proposal for midterm access, and to allow the management and board of NSSF flexibility and liberty in introducing new lines of benefits, is to allow a window of opportunity within the scope of the ILO standard taking into consideration the liquidity of the Fund and prevailing national circumstances.
Anyone arguing that this shall erode the fund is either more concerned with servicing economic interests or isn’t well grounded in the core and purpose of the Fund.
Having a monument and a powerful NSSF with an ever-increasing financial muscle without this translating into the best social security of members is handing over a hitherto social security institute to economic hitmen.
Lies and myths by economic hitmen
As we address the social security interests of workers we continue to encounter and deal with lies and myths peddled by economic hitmen whose major interest is to grab a chuck of the workers money.
As of now we are still faced with another serious controversy and standoff that has led to the two Parliamentary committees handling this bill to be stuck with the report and so we can’t proceed to the 2nd and 3rd reading.
The controversy arose from what the government had proposed to cure the ‘mischief” of the balance between the economic and social security interests.
In the current NSSF Act, NSSF is supposed to be under the ministry responsible for social security.
The function and mandate of social security is under ministry responsible for labour currently under the ministry of Gender, Labour and Social Development (MGL&SD).
In 2003, H.E the President, in his wisdom, administratively transferred NSSF and placed it under the ministry responsible for Finance, Planning and Economic Development, given the volume of funds managed by the Fund.
However, that transfer created a challenge. Whereas the ministry responsible for finance could handle the economic and investment imperatives of the Fund, that are actually secondary and consequential, that ministry has been incompetent in managing the social security aspects.
The solution was to bring on board the ministry responsible for labour that houses social protection world over.
There were 3 options to do this:
Leave the Fund under finance but transfer the department of labour to finance so you create the ministry of state for labour under MoFPED
Create a dual supervision where both ministries, finance (MoFPED) and labour (MGL&SD) work in a guided way;
Revert the Fund to the ministry of Gender, Labour and Social Development.
I did write to H. E the president giving the 3 scenarios to resolve the challenge. However, H.E the President seems to have not taken my proposal and the situation persisted.
However, in proposing the amendment, cabinet seems to have moved and proposed the 2ndscenario as analysed above.
As workers we supported that position as that would resolve the challenge of balancing the economic and social protection interests just like it is worldwide.
Standoff at Parliament
However, as Parliament was concluding the process in the Committee the economic interests lobbied their way and reached out to H.E President who wrote to Parliament guiding that the current situation should remain where the Fund is exclusively under ministry of Finance, Planning and Economic Development arguing that dual supervision would create confusion.
We failed to see the confusion because the mandates of the two ministries were to be outlined by law and indeed this is not the first time or the only entity with such dual supervision.
The approach of leaving NSSF exclusively under MoFPED is dangerous, against social security interests of workers and is being propagated by economic interests at the expense of workers.
It is even unnecessary because we now have a supervisory entity, the Uganda Retirement Benefits Regulatory Authority (URBRA), and so the situation that pertained in the past leading to the transfer of the Fund doesn’t pertain now.
As workers, economic interests have blocked us from having our arguments be understood by the President.
Our view is that you can’t delink the ministry responsible for labour from social security.
You can only bring in the ministry responsible for finance as a partner with that responsible for labour but not as the sole and main player.
The economic interests seem to be misguiding the head of state to the chagrin of workers.
However, we are doing our best and it is just a matter of time that the President shall know the truth and he shall be set free from the economic interests.
That’s where the battle line is between economic and social interests with the economic interests wanting to kill the child while the social protection interests seeking to save the child.
Our prayer, has always been that just as Solomon used wisdom to decipher the right mother from the fake one in the bible, God shall grant wisdom to our President to discern that workers and the ministry responsible for labour are the legitimate mothers of social protection.
A call for zeal and action by NSSF savers
Consequently, we alert the savers to follow this debate keenly and where necessary be ready to come and join us ( i.e. Members of Parliament for Workers, leaders of the National Organisation of Trade Unions (NOTU), Central Organisation of Free Trade Unions (COFTU) and all National Labour Unions, and Workers representatives to the NSSF Board) to camp at Parliament and at the NSSF offices at Workers House should these negative interests continue with their callous attempts to block or delay the process.