Uganda’s largest retirement benefits Fund, The National Social Security Fund (NSSF), will pay an 11.23 per cent interest rate on members’ savings for the financial year 2016/2017, Ajedra Gabriel Aridru, Minister of State, General Duties in the Ministry of Finance, announced Thursday at the 5th NSSF Annual Members’ Meeting.
This is on the back of a good financial performance that saw the earnings grow by 35 per cent from to Shs912 billion in 2017 from Shs674 billion in 2016, boosted by a 19 per cent growth in interest income to Shs781 billion to Shs659 billion and a 39 per cent growth in dividend income from Shs38 billion in 2016 to Shs52 billion in 2017.
The Fund’s total contributions grew by 17 per cent from Shs785.5 billion in 2016 to Shs917billion in 2017 (monthly contributions grew by 18.5 per cent from Shs65 billion to Shs77 billion) as compliance improved from 77 per cent to 80 per cent and the number of employers and members registered, grew by 14 per cent and 9 per cent respectively.
As a result, there was a 20 per cent growth in the Fund’s Assets Under Management, from Shs6.586 billion in 2016 to Shs7.924 billion, keeping NSSF as Uganda’s largest financial institution.
The Minister applauded NSSF for yet again growing the contributors’ savings in real terms.
“Although there has been a reduction in interest paid from 12.3 per cent in 2016 to 11.23 per cent in 2017, this is still 2.6 per cent above the 10-year average inflation rate of 8.678 per cent, which is well within the Fund’s strategic target of paying interest rate, that is 2 per cent above the 10-year average inflation rate,” said Ajedra, adding:
“The interest rate paid this year is also 2 percentage points above the 9.31 per cent average interest rate on fixed deposits (7-12 months) paid by commercial banks and 8 percentage points above the average 3.44 per cent interest rate paid by commercial banks on normal savings deposits.”
NSSF Managing Director, Richard Byarugaba, attributed the Fund’s good performance to its aggressive but prudent investment strategy and improved compliance levels from members.
“We have once again outperformed the economy, meeting and in many instances surpassing our targets. This performance is also above-industry performance, demonstrating that we are delivering value to members, clearly distinguishing the Fund as a preferred savings vehicle”, he said. “This performance is above industry performance meaning that we are delivering value to the members making the Fund a distinguished savings vehicle,” he said.
He said this year, there has been a 12 per cent increment in money allocated to paying interest to members, from Shs606 billion to Shs681 billion. ‘over the last 6 years that we have been in charge of the Fund, there has been a 246 per cent increase (three and a half times) in interest paid from Shs197 billion in 2011 to Shs681 billion in 2017,” he said adding: “With an income of Shs912 billion on Shs7.924 trillion, NSSF’s Return on Assets (11.51 per cent) is above the industry average of 8 per cent.”
“The fact that more and more workers are entrusting their money with us shows that we have earned their trust. It is therefore our obligation to continuously improve our processes through automation and provide our members with a great customer experience. We will also continue to seek more competitive investment opportunities both in and outside the country to strengthen our financial performance and ensure adequate and satisfactory returns to our members,” Byarugaba said.
The Fund’s investment portfolio is in three major asset classes; of Fixed Income, Equity and Real Estate. New real estate investments include, the Shs15.5 billion Mbuya Housing Project, the Shs3.3 billion Jinja commercial complex, the upcoming Mbarara commercial complex, Pension Towers and the US$400 million Lubowa Housing Estate commissioned early this week.
The NSSF Board Chairman Patrick Kaberenge said that the Fund is steadily progressing towards achieving a total Fund value of Shs 20 trillion in 2025 because of an effective corporate governance framework that is delivering tangible benefits to the Fund, as well as a strong leadership team.
Byarugaba said that the Ugandan economy is projected to rebound on the back of increased investment and productivity in key sectors of Agriculture, Tourism and Minerals, Oil and Gas, as well as the informal sector and that the Fund is well positioned to take advantage of the growth opportunities.
NSSF is making progress at the time when government has emabrked on plans to open up the local pension sector.
