NSSF pays 11% interest rate to members
TThe National Social Security Fund (NSSF) declared an interest rate of 11%, which translates into Shs 978 billion to be paid to its members during the 2018/2019 fiscal year.
Matia Kasaija, Minister of Finance, Planning and Economic Development, announced the rate at the Seventh Annual Membership Meeting at the Serena Hotel last week. Even though the reported interest rate is below 15% last year, it remains above the current ten-year average inflation rate of 6.71% and also above annual inflation of 3.4% recorded during the previous financial year. .
The lower interest rate is due to lower regional stock prices and the depreciation of the Ugandan Shilling against other regional currencies which affected the fund’s valuation in all currency balances and equity valuations, affecting thus the overall income of the Fund.
“The stock market in East Africa and in general across Africa has experienced a significant drop in the value of listed entities, thus affecting the performance of the fund as it also invests regionally,” Kasaija said.
He noted, however, that although this year’s rate is lower, the most important thing is that the fund has paid its members a real return thus eliminating the risk of erosion of the value of their savings due to inflation. and that their money still holds value, which is the fundamental issue for long term savers.
Richard Byarugaba, Managing Director, said that despite the difficult investment environment, the fund exceeded most performance targets.
“Overall, we have created value for our members. In fiscal year 2012/2013, we made a commitment to pay members a real return of at least two percentage points above inflation over ten years and we have always kept that promise and have achieved it. done again this year, ”Byarugaba said.
The fund saw a Shs 402 billion reduction in the value of holdings in all currency balances and stock valuations, but Byarugaba believes that since the fund is a long-term investor, the markets will recover.
Patrick Byabakama, chairman of the board of directors of the NSSF, reassured members that the fund was on a growth trajectory, having increased its assets under management by 13% from Shs 9.9 trillion the previous year to 11,300 billion Shs this year.
“The fund is stable and growing and in the future we will focus on finalizing real estate projects as well as innovations to meet the needs of members that will be occasioned by the proposed modification of the NSSF law”, a- he declared. mentionned.
Minister Kasaija promised that the amendment to the bill would be concluded by the end of this year.