Uganda: NSSF Bill - Lawmakers Okay Midterm Access

24 November 2021

Members of Parliament yesterday endorsed a provision in the National Social Security Fund (NSSF) (Amendment) Bill, 2021, to grant members aged 45 and above and who have saved for at least a decade, midterm access to 20 percent of their savings.

The House Gender Committee, which considered the Bill and received public views, has also proposed that persons with disabilities be granted a midterm access of up to 50 percent of their accrued benefits once they clock 40 years as long as they have contributed to the Fund for the preceding seven straight years.

The committee rejected a proposal for the NSSF managing director to have a voting right.

The House began scrutinising the Bill clause-by-clause yesterday following its second reading, and passed Section 24A providing for midterm access to a portion of a worker's savings.

The demand for partial access to the NSSF savings gained traction in 2020 after the ravages of Covid-19, from job losses to pay cuts, manifested in job losses as companies folded up and hobbled.

Demand for reform of the pension law, partly drummed up by labour activists and parliamentary representatives, turned into a groundswell, leading to the 10th Parliament's enactment of the NSSF (Amendment) Act, 2019, in February.

However, President Museveni, who expressed reservations about certain provisions of the Act, withheld his signature, meaning the Act did not become law before the tenure of the 10th Parliament lapsed in May.

A failure to move a motion during the second sitting of the 11th Parliament to save unfinished work of the predecessor House, including the NSSF (Amendment) Act, 2019, prompted Speaker Jacob Oulanyah, much to the chagrin of workers, on August 26 to rule that all the pending Bills will require to be tabled afresh. The government reintroduced the NSSF (Amendment) Bill, 2021, alongside other proposed legislations, on September 29.

Mr Oulanyah gave the Committee on Gender to expedite consultations about it within 10 days since most of the contentious issues about it had already been resolved by the 10th Parliament.

However, the Committee failed to complete work within the prescribed period and debate on the Bill by the whole House resumed yesterday, and only after President Museveni met members of the Gender Committee, leaders of labour organisations and workers' MPs as well as Finance and NSSF officials.

During yesterday's session, legislators also passed a provision that sets a time limit of 60 days for the minister of Finance, the political supervisor of the Worker's Fund, to issue a Statutory Instrument for commencement of the clause on midterm access once the enabling law is gazetted.

This is aimed at creating certainty about the time beneficiaries can start picking part of their NSSF savings.

"The minister shall, in consultation with the board, by statutory instrument, commence Section 24A within 60 days from the date of publication of this Act in the Gazette," the committee recommendation endorsed by MPs read.

The Bill reintroduced on September 29 contained President Museveni's proposals about moving the Fund fully to the Ministry of Finance, but Parliament yesterday altered it following a spirited debate.

Members argued that the Fund should be domiciled in the Gender and Labour Ministry, with its investments superintended by Finance ministry, because international labour laws require workers to be located in the ministry responsible for Labour.

"Parliament and all stakeholders that we have consulted have agreed that NSSF is supervised by Ministry Labour, Gender and Social Development because this is emanating from the international convention of International Labour Organisation which mandates that all social security funds be managed by the minister in-charge of Labour," the line minister, Ms Betty Amongi, said yesterday.

She added: "So, it is our responsibility [as Gender and Labour ministry], but we shall do it concurrently with the government structure and in consultation with Finance (ministry) on financial matters."

Ms Agnes Kunihira, a Workers' MP, said: "We have been fighting for this win because we feel that the money belongs to the workers. Therefore, the workers must have a say. But they can only have a say through their Ministry of Labour."

Mr Arinaitwe Rwakajara, another workers representative, said: "At 45, you have saved with NSSF for many years, that means you are no longer a youth. So if you wanted to invest in something, you pick that 20 percent and invest it. So this is preparing you. Those who have been saving know that their money is there, so they are going to restart their life and are going to engage in economic activities."

Other amendments

Parliament also voted to remove all restrictions on midterm access, including taxing the benefits, a proposal that had caused uproar among workers.

Once enacted, likely today, the Bill will be sent to the President for assent within 30 days.

During yesterday's session, Parliament later stood over consideration of the Bill after MPs failed to agree on Clause 7 that provides for penalty against employers who fail to remit contributions to the Workers' Fund.

The House Gender Committee, which first considered the Bill, had recommended that any employer who does not remit NSSF savings on behalf of their employees be subjected to penalty of 1,000 currency points (Shs20m) or face three years in jail or both.

Following the disagreement, Speaker Oulanyah adjourned the House sitting to 11am today when the scrutinisation of the Bill is expected to continue.

Bill background

The 10th Parliament passed the NSSF Act (Amendment) Bill, 2019, in February, this year. However, President Museveni declined to sign and returned it for reconsideration.

The tenure of the 10th Parliament lapsed before it reconsidered the Act. Then on August 26, this year, Mr Jacob Oulanyah, the Speaker of the 11th Parliament, ruled that any pending Bill from the predecessor House be tabled afresh.

The decision, among others, affected the NSSF Act. It was reintroduced alongside other Bills on September 29. MPs yesterday endorsed its key provision on midterm access ahead of the Bill's expected enactment today.

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