Fund gets new look but worries about benefits to members persist
With the liberalization of the Pension sector only months away, officials of the National Social Security Fund (NSSF) might say they are not "scared" about losing their monopoly but new Fund managers who are waiting only for the word 'go' to pounce; are definitely going to give them a good run for their trillions. With a Shs 3 trillion war-chest at its disposal, the Fund is chest thumping, literally.
"We are not worried at all. After all we are strong enough to beat the competition and hope to remain the number one preferred institution in this sector," Richard Byarugaba, the Fund's managing director, told journalists at a press briefing in Kampala on Dec. 6. Plans are in advanced stages to have the sector opened up for competition with the looming establishment of the Uganda Retirements Benefits Regulatory Authority (URBRA) to regulate the pension sector.
Four months ago, the URBRA board of directors was appointed, paving way for the appointment of the regulatory body. The regulator would among other things register other institutions/pension schemes to offer pension services to employees and to regulate how Fund managers handle members' savings. NSSF currently serves formal employers that have a minimum of five employees, but once the sector is liberalised, every employer will be required to make contributions - which could potentially tipple the number of contributors.
Over the past 12 months, the Fund's balance sheet has grown by 76% from Shs 2.1 trillion to the Shs 3 trillion, which Byarugaba attributed to their strategy to mobilize more savings by improving customer relations, adopting faster but cheaper delivery channels and improving technology. Consequently, the Fund's monthly contributions are up by 71% from Shs 24.5 billion to Shs 42.0 billion in the last 12 months, while member balances have also grown by 70% from Shs 1.7 trillion to Shs 2.9 trillion.
The fund's assets are invested in fixed income (Shs 2.7 trillion or 81%), equities (Shs 391 billion or 13 %) and real estate (Shs 175 billion or 6%). Overall, the Fund is said to be growing by Shs 50 billion month-on-month, but its main challenge over the last few years has been making its members happy. In October, however, members had a rare cause to smile as the Fund increased interest from 6% to 10%, though analysts argued that with better decision-making in investment, a pension manager with such assets at its disposal could have garnered more benefits for its members.
However, Byarugaba appeared to suggest that members should be more optimistic about a 'better future.' "In the liberalized environment, we will be able to leverage our strength, expertise and experience to create great products for our members," he said. Ahead of the liberalization, NSSF has rebranded with a new corporate identity with a refreshed blue and green logo as well as a new tag-line - 'A better future.' Its 500,000 members will have to wait to see if the move is a lot more than a mere change of external looks but rather a symbol of a Fund manager that is committed to deliver a "better future" than dozens of other Fund managers who are just waiting for the go-ahead to start wooing them away, will.