Gabriel Ajedra



The Minister of State for Finance, Gabriel Ajedra, has opposed a proposal in the National Social Security Fund (NSSF) Amendment Bill, 2019 seeking to exempt workers’ contributions from taxation.

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The National Social Security Fund (NSSF) Amendment Bill, 2019, which seeks to provide for mandatory contributions of all workers regardless of the size of the enterprise or number of employees; and to provide for voluntary contributions to the Fund; proposes a tax on members’ retirement benefits.

Minister Ajedra, who was jointly appearing with the Minister of Gender, Labour and Social Development, Janat Mukwaya, before the committees of Gender and said the proposal does not address the issue of equity in the pensions sector.

“If NSSF is exempted, then what happens to other pension schemes? As the Ministry of Finance, that is one of the issues we do not agree with,” Ajedra said.

The two committees are currently scrutinizing the NSSF Bill.

Ajedra said that NSSF is the biggest contributor to capital markets and yet this has been affected by low taxes realized from the pensions sector.

“Uganda has no long-term capital investments. This is caused by the monopoly by NSSF. It is the only company that buys government treasury and bonds and it has no competition,” said Ajedra.

Mukwaya however, said that the proposal aims at promoting social security of Ugandans and enhance coverage of saving and retirement income.

“The Bill allows the Ministry of Finance to be responsible for investing the money. Let [Ministry of Finance] have it but they should respect policy on social security,” Mukwaya said.

Pian County MP, Remigio Achia, said that the income tax law should be amended to exempt taxation of members’ contributions of all pension schemes. “The law should not be selective. It should apply to all for purposes of equality,” Achia said.

The Chairperson of the Finance Committee, Henry Musasizi wondered what rationale would be used to tax members’ benefits. “We want to understand how this is going to be done,” said Musasizi, adding that, “We also need to hear about possibilities to have mid-term access to benefits”.

Bulamogi County MP, Kenneth Lubogo, advised government to consider making provisions allowing members to access their savings before the retirement age.

“People lose jobs and remain unemployed for long. They end up living miserably because they have to wait until they are 55 years to access their savings,” Lubogo said.

The Director of Labour at Gender Ministry, Martin Wandera, explained that the objective of social security is in respect of old age and advised that another fund be set up to cater for the unemployed.

He added that mid-term access was not considered after research was carried out and findings indicated that majority of members preferred to withdraw their funds upon retirement.