The National Social Security Fund (NSSF) will pay 11.23% interest rate to its members for the financial year 2012/2013, state minister for finance, Matia Kasaija announced on Oct. 1.
Kasaija and the Fund's top management including Richard Byarugaba (the managing director) and Ivan Kyayonka (the board chairman) said the increment was passed as a result of improved performance recorded by the country's largest pension fund over the years.
The Fund's assets have grown by 27% from Shs 2.7 trillion in FY 2011/12 to Shs 3.5 trillion in 2012/13. Contributions grew by 18% from Shs 472 billion in 2011/2012 to Shs 558 billion, powered by high compliance level of 72%. The amount of interest credited on members' accounts has increased by 38% from Shs 202 billion in FY 2011/12 to Shs 278 billion 2012/13.
The Fund paid 10% to its members in 2011/2012 financial year. Officials said over 1.3 million contributors to the Fund will earn a total of Shs 278 billion in 2011/12 compared to Shs 202 billion paid out a year before. The Fund's cost to income ratio is now at 16%, better than 55% of the banking industry average in Uganda.
Kasaija applauded the Fund's management for the record performance. "These people deserve credit," he said, you know most Ugandans want to criticize and they do not want to give credit where it belongs.
Officials said the 11.23% increase is two percentage points above a 10 year annual inflation rate which stood at 9.23%. "We promise to always pay our members above the annual inflation rate," Kyayonka and Byarugaba said in their speech.
The Fund invests members' collections in fixed income (short term-fixed deposits and treasury bills). It also invests in long term corporate loans, corporate bonds and government bonds. It also invests in real estate and in equities.