The National Social Security Fund (NSSF) comprehensive income for the 2020/21 financial year increased by 25% from UGX 1.472 trillion to UGX 1.84 trillion, despite the effects of the COVID-19 pandemic, Managing Director Richard Byarugaba announced today.
Addressing the media at the release of the Fund’s financial performance, Byarugaba attributed the increase to growth in interest income largely attributed to the increased return on Treasury Bonds in the Fixed Income portfolio, dividend income, and property sales.
He said the performance demonstrates the Fund’s ability to withstand shocks occasioned by a stressed economy and an uncertain business environment in the era of COVID-19 pandemic.
“The socio-economic effects of the COVID-19 pandemic are still wreaking havoc on economies across the globe, and most businesses may take several years to shake off the effects of COVID-19. Nonetheless, our performance shows that the Fund is not only resilient but can absorb such shocks and continue its growth trajectory,” he said.
Results released by the Fund also show that its Assets Under Management (AUM) increased by 17% from UGX 13.3 trillion to UGX 15.5 trillion as of June 30, 2021, mainly driven by increased contributions and interest income despite an increase in Benefits paid out.
Member contributions increased by 8% from UGX 1.27 trillion to UGX 1.37 trillion.
Byarugaba said that despite recorded job losses in some sectors of the economy, many employers show encouraging signs of recovery.
“For instance, we saw recovery of most employers that benefited from the amnesty we offered to businesses that were affected by the COVID-19 pandemic the previous year,” he said.
The amount of money paid out to qualifying members also increased by 29% from UGX 496.4 billion in 2019/20 to UGX 642.3 billion in 2020/21. The growth is attributed to an increase in number of claimants and the introduction of Invalidity Benefit payments for COVID-19 patients, Byarugaba added.
Byarugaba assured NSSF savers that the Fund is committed to creating value over the long term, while remaining dynamic enough to respond to members’ needs in the medium term, especially with an enabling legal regime upon enactment of the NSSF Amendment Bill.
“Our performance demonstrates that we are creating value for our members even in a very difficult economic environment, and this value will be reflected in the return the Minister of Finance, Planning & Economic Development will announce next week.”
He played down expectations of a very high interest rate but said the Fund will keep its promise to pay a competitive rate, higher than the 10-year average rate of inflation plus 2 percentage points.
Finance Minister Kasaija will announce the new interest rate on members’ savings at the Annual Members Meeting which will take place on 29th September 2021.
Speaking about the NSSF Amendment Bill, Byarugaba said that the Fund is well positioned to implement the new provisions once they become law.
“We have been preparing over the last one year when it became clearer that the bill would be passed. We have solutions for the changes on the horizon, for instance mid-term benefits including mid-term access, expansion of coverage to include the informal sector, and expansion of the voluntary space. We have built a very dynamic institution that can adapt, embrace these changes and thrive,” he said.
2020/21 Financial Performance Summary
- Assets under Management increased by 17% from UGX13.3 trillion to UGX15.5trillion as of June 30,2021, driven by increased contributions and interest income.
- Total Comprehensive Income increased by 25% from UGX 1.472 trillion to UGX 1.84 trillion, driven by growth in interest income attributed to the increase in return on Treasury Bonds in the Fixed Income portfolio, increase in dividend income, and property sales.
- Member contributions increased by 8% from UGX 1.27 trillion to UGX 1.37 trillion. This is better than a marginal percentage growth of 5% recorded the year before. The growth is attributed to the recovery of some employers that has benefited from the Fund Amnesty we offered to business that were affected by the COVID-19 pandemic in the previous year.
- Benefits paid to qualifying members increased by 29% from UGX 496.4 billion in 2019/2020 to UGX 642.3 billion in 2020/21. The growth is attributed to an increase in number of claimants, and introduction of IB payments for the COVID-19 patients.
- Cost of Administration improved from 1.20% in 2019/2020 to 1.03% in 2020/2021