MR. GRACE ISABIRYE is the Ag. Managing Director of the National Social Security Fund (NSSF). In a wide ranging interview below, Mr. Isabirye discusses the new path the Fund is taking following introduction of a bill that seeks to reform the Pensions Sector.
1. The Financial Year is coming to an end and workers will expect a better interest rate that the 3% paid this year. What is the performance of the Fund so far? Will this translate into better returns for the workers?
This year will be better because most of the factors that impacted on our performance last year have not been evident this year. Last year‘s performance was affected by the drop in share prices, suspension of investments and costs that were incurred by the Fund.
 When the new Board came in place, some of the expenses were deferred. We opted to run on two fronts: Driving a very aggressive business outlook within a framework that depends on accountability and secondly to achieve cost control. This has been complemented by improved trends in the stock market. We hope to give a better interest rate for this financial year. Interest paid to members will be determined at the end of the Financial Year in June and it will depend on our financial performance. For the Financial Year 2009/10, the Fund’s performance has greatly improved. We hope to give a better interest rate for this financial year
2. What is the fate of the various NSSF housing estate projects? When will NSSF members see Lubowa, Temangalo estates coming up?
Our priority as management is to ensure that all the projects and investments which had stalled take off again, are completed and become profitable. NSSF currently holds 563 acres in Lubowa, 0.7 acres in Mbuya and 463 acres in Temangalo. We want to start off with the development of Lubowa and Mbuya estates which are in prime areas with infrastructure. For Lubowa we are in the process of getting a consultant on board. 3000 houses for mid and high income earners are to be constructed and the project to kick off by end of next Financial Year 2010/11. Houses will be built and sold. For Nsimbe, our priority is to unlock the value by either buying out the other partner or buying us out.
For Mbuya we are finalising the procurement of a contractor to start construction of apartments to be sold. We have all the titles of Temangalo land which are now in our names. The land value is appreciating; however our ultimate goal is that we have properties there. These development projects will start one at a time, while preparation for other projects can be done co-currently. In all these projects we shall follow the PPDA procedures. We are making sure that moving forward we are complying with the laws and that there is no conflict of interest in any of our projects.
3. How about the Pension Towers project; the last we heard was that KCC had given NSSF permission to resume constr uction?
We fulfilled a number of conditions which were recommended after the accident. KCC, NEMA and the Ministry of Works gave clearance for construction to go ahead. If you use Lumumba Avenue, you will see activity as work is going on. The project is going to be done in two phases. The first one will take 22 months and I must tell you that we are on schedule. The first phase involves construction of 3 levels of basement and is being done by Roko Construction within their current approved contract terms. Phase two will be tendered at an appropriate time and will involve construction of the 3 towers. The middle tower will have 24 storeys while the other towers will have 7 storeys, each tower will have 4 basements, a ground floor and a mezzanine.
4. Parliament will soon start debating the Retirement Benefits Authority Bill that will lead to liberalization of the Pensions sector. What is NSSF’s position on the liberalisation?
We have already engaged the government and given our proposals on the subject. The RBA aims at opening up the sector to other players to enhance the savings rate in the country and develop the capital markets, just as it in Kenya and other countries. The RBA will provide regulation for the sector and NSSF supports government’s efforts to reform the Pension Sector and extend social security to more Ugandans.
It is good for the country because it will help to improve on the saving rate which is currently at 6 percent, 5 percent of which is saved in NSSF. We welcome new players everybody will benefit from a better saving culture which is still low compared to countries like Kenya where the saving rate is up to 50 percent of the GDP. The legislation will also improve service delivery in the pensions sector. However none of the players will provide Social Security which is the mandate of NSSF under the ILO conventions. There is always a mandatory scheme in every country and this will remain our mandate; but other players will join the market to set an avenue for saving.
5. Is NSSF ready for liberalisation? What has the Fund put in place in readiness for completion with the private players once the sector is opened up?
We are very ready. It is our vision to be a leader in the in the region through creating value for our members with a variety of products. We welcome competition and intend to beat it and lead the pack. We shall be a leader because of advantages we have over the prospective players in the sector. We have experience in the business since 1967 and the Fund has continued to grow and improve. We have a large asset base and investments and a net worth of over UGX 1.5 trillion. We have a large and growing membership and we continue to consolidate our membership of over 400,000 through improved service delivery in terms of payment of benefits, regular update and issuing of statements through employers, email and individuals at our offices, follow-up on defaulting employers. We have also decentralizd services to all our 24 offices across the country. We have set particular targets and everyone is aware of their role in making us the best in the region. Above all NSSF is run by competent, dedicated and committed Board, Management and Staff and we are very prepared for competition.
6. There are still some complaints out there that people cannot access their savings easily when they qualify because of delays. What causes these delays? How long does it take a person to be paid benefits?
Some of the people who complain sometimes don’t even qualify to access the benefits by law. We are however sensitive to the needs of our customers for other products and have proposed some amendments to the NSSF Act, which we hope, will be addressed. My assurance to the members is that these concerns are short term and are being addressed. However NSSF strives to pay all qualifying beneficiaries within the shortest time possible. Benefits processing now take an average of 28 working days down from 80 days in 2007 and 40 days in 2008. It is evident and we get to hear or read about our members appreciating. We are on the way to achieving our target of 2 weeks as per strategic plan. We pay an average of Sh. 6 billion per month to over 1000 qualifying members. In January, February and March 2010, we paid Shs 4.5 billion, Shs 5.9 billion and Shs 7 billion respectively. All benefit claims go through a thorough verification process before payment. Verification is done to ensure that the right beneficiaries are paid the right amount of money and also to avoid payment of fraudulent claims.
7. You took the helm of the Fund amidst the Auditor General’s investigation into NSSF. Several policy lapses were unearthed by the investigation; what has Management done to close these lapses?
Management’s view is that every individual mentioned in the report should take responsibility for their actions. The Board met in January, discussed the report and made recommendations to the appropriate authorities. The Minister of Finance, who directly supervises the Fund, did not renew contracts for former Managing Director and Deputy Managing Director on recommendation of the Board. The MD’s position has been advertised and recruitment is to be done through a reputable consultancy firm. Internally, all policies have been reviewed and tightened and we are now enforcing strict adherence to all these polices and rules relating to investment, procurement, security, loans and staff advances among others, and also strict cost control measures. All advances have been recovered to zero, credit card usage was already stopped and we are emphasizing compliance with the law. All the issues that were raised in the report have been fundamentally sorted out. The Board and Management have emphasised strict adherence to policies and procedures in place.
8. NOTU and other workers unions are pushing for a medical benefit to be provided by NSSF within the current rate of contributions. How far has NSSF gone with this plan?
Our view is that every Ugandan is entitled to proper health care as a basic human right. NSSF requested International Labour Organisation (ILO) to carry out an actuarial assessment with a view of determining the viability of providing the medical benefit. ILO carried out a preliminary fact finding mission and held consultations with several stakeholders. ILO’s preliminary view was that a medical is a good idea and generally possible. However, the final decision and design of the product can only be taken based on findings of a comprehensive actuarial assessment. We have plans to undertake this assessment in future. In principle, the Fund is committed to respond to needs of our members by giving them more relevant benefits
9. Workers also want to see the Fund become more responsive to their needs with more benefits. Are there any planned new benefits?
The Board and management will make appropriate proposals to Government. One of the proposals we intend to bring up is a provision which will allow contributors to access part of their savings when they are in difficult circumstances and in desperate need for money. These recommendations will eventually go to Parliament and everybody concerned will have an opportunity to make a contribution to the debate. The current Act of Parliament governing the Fund was enacted in 1985, and it provides for 5 Benefits namely; Age, Invalidity, Survivors, Withdrawal Benefits and Emigration grant. We acknowledge that some of its key provisions are out of date and are due for amendment to respond to changing conditions, circumstances and demands. This is solely a responsibility of Parliament. As I have already noted, our focus is to be responsive to the needs of our members and we are planning more benefits to address this issue and as part of our strategy to beat the competition. Some of the proposed new benefits will include Maternity benefit, health/ Medical Insurance benefit, Unemployment benefit, Funeral Expenses Benefit, HIV/ AIDS related product/benefit
11. What Role can Social Security or Pension Savings play in an Economy like ours
Social security protects individuals against the risk of loss or substantial reduction in
income due to invalidity, occupational injury, sickness, maternity, old age, death,
unemployment, children and family obligations ILO, Universal Declaration and other
labour laws look at social security as a human right for any successful market
economy. In Uganda today, the current savings rate is at 6%, implying that the MPS of
Ugandans is very low. Most of their income is consumed. Of this 5% save with
NSSF. The other 1% is in Government Pension Scheme and other Unregulated
occupational schemes. Part of NSSF’s mission is to drive Economic development by
investing in viable projects such as Equity, Real-estate among others. This will also
help create jobs and in turn stimulate other sectors of the economy.
12. Any other issue you would like the public to know?
The public should not rush to judge the Fund basing on historical issues. In our view, judgment by history is defeatist. We need to focus on the positive improvements. We are addressing the things that members require of us and we are mending our relationships with all stakeholders.
Our members should not have a misconception that the RBA will wipe out the Fund, but should be aware that it is important that we maintain a mandatory scheme and that NSSF will give value to members. Our vision is to be the best in the region and the preferred destination for members and all people who want to save for the future.
END |
