NSSF savings not a contingency fund for emergencies

By Seth Nimwesiga

Recently, I was watching 9.00pm news when I learnt through the minister in charge of Labour, Hon. Frank Tumwebaze that there is before parliament, a proposal to amend the National Social Security Fund Act cap 222 to allow employees withdraw part of their funds to help them cater for expenses during this lockdown caused by the Corona Virus.

The National Social Security Fund (NSSF) body was established in 1985 to cater for the social security of employees in the private sector. Noteworthy, in Uganda, the idea of a social security scheme was not born by the 1985 Act, rather, it was first codified in the Social Security Fund Act of 1967. Back then, the law faced a backlash, so much so that it formed part of Idi Amin’s reasons for staging a coup against Milton Obote 1’s government as it was perceived as an additional levy to the excessive types of taxes that existed and thus to further reduce the already humble salaries of Ugandans. Nonetheless, the idea unwaveringly survived a number of political regimes until 1985 when a bill was passed to repeal the 1967 Social Security Act and establish the currently autonomous NSSF body, among other purposes.

The law as is, allows an employee of or above sixteen years and below the age of fifty five years to be a member of the NSSF provided they are not a nonresident, employed outside Uganda, or one employed in excepted employment under the Act, such as public servants who are eligible for pension, soldiers of the UPDF, members of the Uganda Police Force, Prisons Service, etcetera. Members of the Fund make a 15 percent of their monthly salary contribution divided between the employer and employee in the ratio of 10% to 5% respectively.

One does not need to be a historian to imagine the life challenges private sector workers faced upon retirement before this kind of social security arrangement. This can be related to the life led by unemployed wanainch without any stable source of income; it is quite an undesirable life.

It goes without saying that there exists a challenge for an employee who sits at home in a lockdown spending on groceries whose prices have been inflated  by the outbreak of Covid-19, but believe me you, that challenge is not worth the price one could to pay by risking to live a poor life at 60+ years. Just like Covid-19 is a disease, not a bonanza to uplift employees’ wealth, the savings with NSSF are not a sort of rescue fund for such an emergency situation.

Employees should therefore refrain from making difficult, the work of a body that is more concerned about their welfare at the time when their backs start to bend. Every employee needs to weigh the option of enduring for a month or two and paying the price of living a broke life as a 60year old. There is, in my opinion, not enough justification for the latter. The lockdown is a war against a pandemic that is being fought by everyone else including those who have no salaries to count on.

The essence of saving for the future is to assist employees to sustain themselves in their retirement, the same way they did while they still worked. The social security arrangement should be perceived as a life insurance sort of policy for a retired private sector worker. Reducing the retirement benefit at a time when one is still energetic enough to hustle, should be the last thing that employees want to think about amidst this pandemic as it will be needed to lift their elderly selves from a worse problem of poverty. As the old adage goes, patience pains but pays.

The Covid-19 situation should be a reminder to everyone to rethink their saving culture to avoid future desperate moves such as this one that is intended to substitute the cardinal motive for which the National Social Security Fund was established.

The writer is a lawyer with focus on Labour Law.

niimseth1@gmail.com