Workers to access savings after Parliament passes NSSF Bill
Parliament has passed the National Social Security Fund (NSSF) Bill, which will see contributors aged 45 and above have mid-term access to their savings.
The Bill was stood over in September 2020, over a contentious Clause after lawmakers failed to agree on the categories of people to have mid-term access.
The report proposed that mid-term access provides for additional benefits and relief to members of the Fund before they reach the age prescribed by the law.
“A person with a disability who lacks gainful employment or fails to generate income and unable to make contributions to the Fund for a period of not less than one year should access up to 75 per cent of their contributions upon application,” the report reads in part.
However, in his minority report, Bulamogi County MP, Hon. Kenneth Lubogo said that members who lose their employment and remain unemployed for a period of not less than three years should, upon application, be entitled to 40 per cent of the balance on the member’s account.
While presenting the amendments by the committee on Gender during plenary sitting on Wednesday, 17 February 2021, Committee Vice Chairperson, Hon. Agnes Kunihira suggested that members who has made voluntary contributions should be allowed mid-term access to their benefits accrued from the voluntary savings.
“A member who is employed and is 45 years and above or has contributed to the fund for at least 10 years is eligible to mid-term access of a sum not exceeding 20 per cent of his or her accrued benefits,” she added.
The clause was further amended to allow members with disabilities who cease to be employed for a period not less than one year to withdraw 75 per cent of their accrued benefits.
“The Minister shall in consultation with the Board describe statutory instruments, terms and conditions and procedure for accessing the accrued benefits,” stated Kunihira.
The State Minister of Gender, Labour and Social Development, Mwesigwa Rukutana, however, said that government maintains its position on the main objective of social security, saying that it is to ensure that persons getting secure retirement and therefore mid-term access should only be maintained on voluntary contributions.
“To open up mid-term access on standing contributions under article 24 (a) undermines the cardinal principal of social security of ensuring secure retirement.
He added that allowing persons with disabilities (PWDs) who ceased to be employed for over one year is worse because PWDs are disproportionally affected by old age.
He proposed that instead of allowing mid-term access of the voluntary contributions, the Board may in consultation with the Minister by statutory instrument prescribe additional benefits including mid-term access of standing contributions.
The House, however, voted to adopt the amendments made by the gender committee.
The committee also maintained a position on the deletion of Clause 12 that proposed direct lending by NSSF to government.
In practice, NSSF already lends to government through government securities, treasury bills and bonds, or other instructions sold in open markers.
Hon. Kunihira said that lending through the open markets ensures that members’ funds are protected from transactions below market interest rates, high costs are not imposed on savers and the financial market is not distorted since NSSF is a key player in the Uganda market.