Members of the National Social Security Fund (NSSF) will earn an interest of 9.65% on their savings for the financial year 2021/22 translating into UGX 1.38 trillion that will be credited to their accounts.
This is lower compared to the interest rate of 12.15 for the FY 2020/2021.
This was announced by Henry Musasizi, the Minister of state for Finance (General Duties) who represented the Minister of Finance, Planning and Economic Development Matia Kasaija, at the Fund’s 10th Annual Members Meeting held at the Kampala Serena Hotel on Tuesday.
Musasizi applauded the Fund’s resilience against turmoil in the business world on the global and domestic stages to register a strong performance.
“The interest declared is above the 10 years average rate of inflation which stood at 5.5% as at end of June 2022 and is a competitive rate in the market this year, given the economic shocks faced in 2020 that have continued to impact the global economy to date,” he said.
The decline in the 12.5% interest rate paid the previous year was mainly attributed to the reallocation of investment in long term to short term fixed income instruments to provide liquidity for mid-term payouts, inflation pressures and spillovers from turbulence in the global economy, according to the NSSF Managing Director, Richard Byarugaba.
“The Fund this year paid an unprecedented UGX 1.19 trillion in total benefits to members, over 40% of which went to midterm payments. We had to invest in short term instruments whose returns are lower to provide for liquidity to pay eligible mid-term benefit to claimants,” he said.
“Further, several shocks hit the world economy which had already been crippled by the COVID-19 pandemic, including higher than expected inflation the world over, spillovers from the war in Ukraine as well as production slowdown in China. All these impacted the projected global economic growth from 6.1% to 3.2% in 2022 which ripple effects we felt in the dip of East African regional markets, where NSSF holds several investments.”
The strategic decision to make short term investments to have liquidity for midterm access, according to Byarugaba shed off 0.69 percentage points off the potential interest and the volatility of EA markets also cost a potential 1.75% in interest which would have put this year’s interest almost at parity with last year’s.
Nonetheless, the Fund still created value for members, which is the fiduciary obligation the Fund owes members, according to the Board Chairman, Dr Peter Kimbowa.
In accordance with the provisions of the NSSF Act, this new rate will be calculated and credited on the balance outstanding on each member’s account as of 1st July 2021.
Other performance indicators show that the Fund registered growth in its Assets under Management that increased by 11% from Ushs15.5trillion to Ushs17.3trillion and member contributions that increased by 9% from Ushs1.3trillion to Ushs1.48trillion.
I&M Select Banking Sapphire Club wins “Best Innovation of the Year” at UMEAS 2025Amongi Betty Ongom, the Minister for Gender, Labour and Social Development who presided over the Annual Members Meeting congratulated the Fund for its good performance and commended it for efficiently executing the midterm benefits payment that is one of the key provisions in the NSSF Amendment Act 2021.
“All qualifying members who applied for mid-term have been paid, and all received their money in just 9 days, compared to the statutory 45 working days in the Regulations,” she said.
Amongi advised members to consider their NSSF savings as the last option even though the law now opens access to midterm benefits. She mentioned that these savings should be considered as social security savings for retirement and not for short-term needs.
“NSSF is a social security Fund and not a bank where you can withdraw money anytime. Unfortunately, due to economic turbulence, we were forced to enact a law that opened midterm access which has contributed to lowering the interest rate paid.”
FY 2021/22 Financial Performance Summary
i. Assets Under Management increased by 11% from UGX15.5trillion to UGX17.3trillion. The growth is fuelled by the investment capital expenditure from the increasing incomes which are growing at higher rate than the outflows.
ii. Member contributions increased by 9% from UGX1.3 trillion to UGX1.48 trillion. The growth in contributions was mainly driven by payment of arrears, new member registrations and reactivation of employer accounts.
iii. Benefits paid out to qualifying members increased to UGX1.19 trillion from UGX642.3 billion. This was fuelled by mid-term payouts to qualifying members.
iv. Total Comprehensive Income slightly declined from UGX1.84 trillion to UGX1.776 trillion. This was because of a reduction in valuations of the regional equity markets, and re-allocation of investments from long term to short term instruments to avail liquidity for mid-term benefit payments.
Interest rates through recent years
2013: 11.23%
2014: 11.5%
2015: 13%
2016: 12.3%
2017: 11.23%
2018: 15%
2019: 11%
2020: 10.75%
2021: 12.15%
2022: 9.65%
