BONANZA! NSSF board members in Shs20m monthly pay rise  

As the National Social Security Fund (NSSF) chokes on the ongoing probe, the board members are bracing for a pay rise.

According to the available information, in January 2022, the Fund commissioned Japheth KATTO Consulting, a tier 1 corporate governance consultancy firm, to conduct an independent benchmarking survey on Board reward and remuneration.

This was meant to assess the Fund’s standing against comparable entities in the public and private sectors in the country and region.

The consultant’s report and recommendations were approved by the line ministry of Gender for adoption but one issue was not resolved— inadequacy of the monthly board retainer allowance remains pending.

The board members would then go back on the drawing board and undertook a desktop review with the Fund’s investee companies.

It was found out that the fund is amongst the top 5 by asset size in comparison to its investee companies, and yet it is not in the upper percentile when it comes to Non-Executive Director’s retainer fees.

The top investee companies seek to remunerate their Non-Executive Directors at least at the 75th percentile of the market.

It was also observed that amongst the investee financial institutions, for example, Absa Bank Kenya Plc (ABSA.ke) is amongst the top when it comes to Non-Executive Director retainer fees.

The financial institution pays an estimated USD 5,000 to the Board Chairperson. The Fund holds over two hundred thousand shares in Absa Bank Kenya Plc.

NSSF board members also discovered that Umeme Limited, one of the local investee companies in which the Fund holds at least a 23.11% stake, is one of the top remunerators.

It was observed that the utility company pays an estimated USD 5,800 to the Board Chairperson and USD 4,100 to other Board Members.

It was also observed that at least half of the investee companies offer a different retainer fee for both the Board Chairperson and the Chairpersons of the various committees.

JUSTIFICATION

Armed with this, NSSF board emphasised that the current positioning of the Fund’s Non-Executive Director’s retainer fees poses serious challenges for the Fund and unduly diverts the attention of the board from focusing on their core mandate, which is to have ultimate responsibility for the management, general affairs, direction, culture, performance, and long-term success of the Fund. This situation also poses serious concerns, negatively impacting motivation, and commitment of the board.

They felt the move will align the BOD remuneration with comparable tier 1 entities within and beyond Uganda.

That this will also enable and facilitate the BOD in providing seamless stewardship and oversight in harmonizing the new and applicable sector rules, guidelines, and regulations during this transition.

The same will also go a long way to frequently support Management in field testing the new products and services within the context of the Fund’s expanded mandate as a result of the NSSF Amendment Act.

PROPOSED PAY RISE

The board also went on to propose pay rise estimates that would enable competitive compensation of Non-Executive Directors in comparison to peers and its investee companies.

It has now been proposed that the board chairperson’s pay will rise to Shs20m from Shs9.5m per month.

There is also a proposed introduction of a Committee Chairperson’s retainer fee. A retainer fee of Shs17 has been proposed.

Other board member retainer fees will also increase from shs7.5m to shs 15m.

“Based on the above, we request you to approve these recommendations and adjustments to the board’s retainer fee remuneration. In addition, we request that these payments be applied with effect from the dates of their appointment. For the months already paid, they would offset with the paid retainer fee. The Fund has provided for these payments in the Budget by re-allocating from other less critical activities,” read a letter dated August 16, 2022 from then MD Richard Byarugaba to Gender Minister Betty Amongi. It is not clear whether these were approved or not.

The monthly retainer is separate from allowances that each board member commands at every seating.

NSSF has been contacted for a comment. Could this have been a reason why NSSF board recommended Byarugaba contract renewal?

Dr. Peter Kimbowa is the board chairman.

The board also has David Kibenge from the Ministry of Gender, Labour and Social Development, and Patrick Ocailap, representing the finance ministry while Dr. Eng. Silver Mugisha and Finance Trust Bank Managing Director Annet Nakawunde Mulindwa represent the Federation of Uganda Employers (FUE).

Others are Sam Lyomoki and Penninah Tukamwesiga on behalf of the Confederation of Free Trade Unions (COFTU) while Uganda Nurses & Midwifes Union’s Treasurer Annet Birungi and Hassan Lwabayi Mudiba represent the National Organization of Trade Unions (NOTU) and the NSSF managing director serves as the executive member of the board.

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