Employers under their umbrella Federation of Uganda's Employers (FUE) have supported National Social Security Fund (NSSF) on midterm access, saying 20 per cent is very little for savers to do a long-term project.
Last month, a joint Parliament committee approved mid-term access to NSSF savings.
The principle of allowing mid-term access to NSSF members who have at least saved for 10 years or have reached 45 years was agreed upon.
However, there was deadlock on whether to fix at 20 per cent or allow the board to determine the percentage savers will be getting.
While addressing the media during a breakfast meeting in Kampala yesterday, Mr Douglas Opio, the executive director of FUE, said the 20 per cent proposal was misplaced because the money will be misused by savers.
"We started with an analysis of what 20 per cent means and we realised that the saving level of people is still very low and nearly 80 per cent of savers are in Shs10m in terms of what they have in NSSF," he said.
Mr Opio added that if the 20 per cent of Shs10m is given out, it will not significantly contribute to the employees' welfare.
"We want savers to get reasonable level of interest. NSSF has been paying above inflation consistently for nearly 10 years, so we have had the highest at 17 per cent and this has contributed a lot to our savings," he said.
Mr Opio also said a study from NSSF indicates that majority of the savers waste their money after two years of getting their lumpsum payment.
"NSSF should have the opportunity to invest the money of the savers to be able to pay them a decent interest so that when they retire, the money has grown a lot bigger but if we take it now, it is like sacrificing current consumption which would have been earned in future," he said.
Mr Shaffi Manafa, the head of membership development and marketing at FUE, said NSSF should instead use the money for developmental projects.
"It is important to be tied to some developmental projects such as acquiring land, housing or medical assurance because when the savers retire, they find it hard to access or to acquire such projects ," he said.
If Parliament passes the proposed NSSF amendment Bill on mid-term access to savings, the workers fund may have to sell assets to raise the Shs2.9 trillion required to pay 320,000 members who currently would qualify for 20 per cent payment of their pension contributions. Last week, the NSSF managing director, Mr Richard Byarugaba, said the Fund projects to collect Shs1.35 trillion in contributions this year and a further Shs1.3 trillion from investments. This total of Shs2.65 trillion is short of Shs2.96 trillion payout required. This is before considering other administration expenses, statutory payments like taxes," Mr Byarugaba said.
However, the Bill is likely to get shelved since yesterday was the last day for MPs to discuss about the pending issues before going for recess, and it was not on the order paper.