President Museveni has finally cleared workers to have midterm access to their National Social Security Fund (NSSF) savings.
Despite being passed in February this year by the 10th parliament, there has been a stalemate that led to delay in assenting to the NSSF Amendment Bill 2020 by the president.
However, on Wednesday, the president directed the Minister for Gender, Labour and Social Development Betty Amongi to make changes to the bill and return it for consent.
“I have agreed to midterm access for workers to the maximum of 20% as had been proposed in the NSSF bill,” Museveni said.
Using dramatic backdrops and biblical sayings, Museveni noted that having cleared the midterm access, if this does not work out, it will be a lesson learned together.
“You remember Shakespeare’s play The Merchant of Venice? Shylock with his my pound of flesh whether you die or what! For the NRM not to be that Shylock and since these people think this is the solution, let’s go ahead. If it doesn’t work out we shall see and learn together instead of being like shylock,” he said.
If signed into law, it will allow contributors to NSSF who have clocked 45 or have saved for at least 10 years will now have access to 20% of their savings with NSSF.
There was a stalemate caused by the difference in the payout figure as presented by NSSF on one side and workers’ representatives on the other side.
Workers argued that NSSF would pay out shs800 billion in total if savers who have clocked 45 or those who have clocked 10 years are given 20% of their savings.
“Those who are holding above Shs10m are 62,000. When 20 per cent is allocated to them, they will take about Shs36 billion. Those between Shs10m and Shs100 million are about 35, between Shs100m and Shs500m are 9,000, those above Shs500 million are 840,” the National Trade Unions (NOTU) chairman, Wilson Owere told President Museveni two weeks ago.
He insisted that the fund will not be depleted as is being said by NSSF that he accused of exaggerating the figure.
However, on the other side, NSSF Managing Director, Richard Byarugaba said if the bill is signed and the midterm access is allowed, the fund would lose money since it would offer securities at a discount in a fire-sale.
He noted that each worker saves for between 25 and 30 years and earns Shs150m, adding that if they access their savings now, the fund would lose up to Shs30m in 20 years.
However, the president on Wednesday allayed any fears by NSSF noting that he was more concerned with destroying the viability of the fund.
“The fear was if you do that, you degrade huge money put together and which the fund is using to invest instead of going abroad to beg. Also a worker may end up getting less by 30 million at his retirement,” he said.
According to Byarugaba, the fund collects shs125billion a month which translates into shs1.5trillion per year and pay up to shs900 billion for members qualifying in other benefits.
However, Minister Amongi Betty said they had delved into all the issues and their conclusion was that, it would not have a substantial impact on the depletion of the fund since it is shs15 trillion and they need between shs800 billion to 1 trillion to handle mid-term access at a go.
“We agreed to schedule it. We don’t pay all at a go but about 20% of members in a certain period and have also have a criterion like age and amount saved,” Amongi said.
The Minister of Finance Matia Kasaija said they had already briefed the president on how they are going to handle this including formation of regulations that will govern the way the money will get out.
The National Trade Unions (NOTU) chairman, Usher Owere commended President Museveni for the bold decision and thanked him on behalf workers of Uganda for listening to their plight.
“Workers are very happy with you. You have saved this country and workers will never forget you. I thank the workers for being patient,” he said.
According to a statement from State House, the commencement date will be set in the statutory instrument; supervision of the fund is by the Ministry of Finance, while the NSSF Managing Director is a member of the board of directors.