National Social Security Fund (NSSF) is projected to grow an asset base of over Shs6 trillion by 2017, making it by far the largest Fund in East Africa, Ivan Kyayonka NSSF Board Chairman has revealed.
Kyayonka made these remarks during the 2nd NSSF Annual Members Meeting that took place today 28th October 2014 at Kampala Serena Hotel.
While addressing the Fund’s members and employers, Kyayonka said that NSSF is growing at a rate of over Ushs 50 billion per month, and is projected to grow further with or without the liberlisation of the retirement benefits sector.
The Fund’s current asset base of Shs4.4 trillion ($1.7 billion) as at June 30, 2014, outstrips NSSF Kenya which is at US $ 1.6 billion and NSSF Tanzania at US $ 1.3 billion.
“NSSF Uganda has become the benchmark for the industry both within and outside the East African region. Our performance over the last 4 years has laid the foundation for our future. Overall, our objective is to become the social security provider of choice, with or without liberalization of the industry,” Kyayonka said.
He added that the Fund plans to roll out new products for both the formal and informal sector. The new products include housing, health/medical and education among others.
Over the long term, the Fund aims to increase Social Security coverage, and become the best pension Fund in Africa, he said.
“Our commitment has not changed. We will protect, preserve and grow member savings with reasonable returns. We plan to re-engineer and automate business processes and improve access to our services by rolling out a smartcard,” he added.
To achieve this, he said, NSSF has adopted an investment model that is both aggressive yet prudent. “We are planning to diversify the investment mix by increasing our equity portfolio and changing the real estate investment strategy. We want to optimise our real estate portfolio to 6% from 10% and unlock Stalled Real Estate Investments,” Kyayonka added.
The Fund also plans to help coordinate the government to issue long term infrastructure bonds, participate in the Oil & Gas sector.
NSSF Acting Managing Director Geraldine Ssali Busuulwa said that the Fund grew by over 150% over the last five years.
Compliance levels improved from 52% in 2010, to 73% in 2013 and it’s at 77% in 2014. Contributions grew year on year average of 23%, annual total contribution more than doubled from Shs 295 bn in 2010, to Shs553 in 2013, to Shs 638 bn in 2014.
“The Fund’s assets are more than adequate to cover member liabilities. We don’t have significant external liabilities. Members’ claim against the Shs 4.4 trillion asset base stands at 98%. As per our renewed promise, we shall continue to deliver competitive returns on investments to all our members,” Ssali said.
Over the five years, total income grew by 261%. Annual income grew from Shs160 bn in 2010, to Shs490 bn in 2013 and it is at Shs552 bn in 2014. Fixed income securities returns averaged 14%, Equities returns averaged 13%, and Real Estate returns averaged 6.5%.
“This level of revenue enabled the Fund to not only cover its overheads but also provide members with double digit returns,” Ssali explained.
NSSF recently announced interest rate of 11.5%, an increase from 11.23% paid last year.
In the midst of tough economic times, aggressive but prudent investment strategy led to revenue growth of more than 200%. The result is that members received more value that led to more income credited back to member accounts. In 2014, Shs 365 bn was credited to members, up from Shs281 bn in 2013
During the AMM, NSSF recognized and awarded the best employers in terms of compliance, basing on the Fund’s 360 degrees compliance check – payment of contributions for all their employees, in the right amounts of money and in time.
Hima Cement won in the Silver category (Ugx 100m – 500m monthly contributions). Office of the Auditor General and TASO Health Workers came second and third.
In the Bronze Category (below Ugx 100m monthly contributions), Vision Fund emerged the best, followed by Mairye Estates and Shoprite Checkers were the second runners up in this category.