NSSF to allow members to withdraw their savings in bits

National Social Security Fund (NSSF) has announced that qualifying members will now be able to withdraw part of their savings other than in a lump sum.

In the past, qualifying members were given their savings at once and on many occasions ended up overspending the money.

Addressing a news conference on Wednesday, Patrick Ayota, the deputy managing director said the plan dubbed the NSSF Draw Down Payment Plan  will enable qualifying members utilise their NSSF savings slowly as they work through a retirement  and investment that works for them.

“We have received several requests from qualifying members to pay them a portion of their savings and pay them the balance in instalments as they finalise their investment plans for the large sums saved.” Ayota said.

“It helps to extend income security during retirement because a member can decide how much they wish to retain in their NSSF account and when they wish to claim it all. This will enable our members avoid the risk of burning out life’s savings upon payment of a lump sum at a go by cushioning against losses, which may arise out of making rushed investment decisions.”

According to Ayota, the new plan was informed by a survey conducted amongst members aged 45- 60  where 62% of the respondents  said they would consider the payment of their benefits in instalments rather than receiving them in a lump sum.

“An earlier internal survey found out that more than 70% of the beneficiaries had depleted their savings received from NSSF within two years, and most wished they had had an opportunity to receive their savings in instalments,”Ayota added.

He said members will have an opportunity to maintain a cash flow pattern that they may have been familiar with while still in employment.

Ayota also said that members that enrol for the plan would continue to receive annual interest on their balances retained by the fund in line with the interest that will be declared by the responsible minister in a given financial year.

The NSSF Draw Down Payment Plan will only benefit those members who qualify for age benefit and withdrawal benefit.

According to the NSSF Act, age benefit is paid to a member of the fund if he or she attains the age of 50  and has retired from regular employment; or if he or she attains the age of 55.

Withdrawal benefit on the other hand is paid to a member of the fund if he or she attains the age of 50; and if he or she has not been employed under a contract of service for a period of one year immediately preceding his or her claim.

Withdrawal benefit is also paid to any person who ceases to be a member of the fund by virtue of being employed in excepted employment.