When the long- awaited Annual Members Meeting of the National Social Security Fund opened on Monday morning, the question uppermost on everyone’s mind was what interest on savings was to be announced.
It was the Fund’s first AMM to be conducted wholly online, guaranteeing maximum attendance by millions of members and non-members watching and participating in the virtual space. Finally, Finance minister Matia Kasaija took the floor.
Given the economic downturn in virtually all the sectors, many expected a 7% declaration at best, but 5% wouldn’t have elicited many protests either, given the current situation. Then Kasaija dropped the bombshell – 10.75%!
While Kasaija’s bombshell was greeted by jubilation by the million plus NSSF members, it drove a hard nail in the coffin of the campaign that started with the covid-19 lockdown to have 20% of members’ benefits paid out as relief. For it is more than half of the 20% that savers would have taken out of their retirement aga package had the payout been effected.
This is not to count the lost compound interest for all the years to come. In case of savers in say, their thirties, they would have lost several times much more that whatever the 20% equals to in their individual accounts.Quite a sobering effect, the announcement had.
Actually, agitation for the 20% payout was not all that necessary in the first place because the government took a quick step to ‘forgive’ or defer contributions for three months. This was not a small step considering that the contributions are an obligation on employers and employees. That in itself was a relief and well, the total lockdown lasted just that long.
But even people who stopped earning did not die of hunger, as the fascinating stories we saw on TV and continue reading in the newspapers indicate. People like private school teachers for example thought outside the box and some have struck gold in farming and others in brick making. In fact, the worried people now are proprietors of schools who know for certain that not all teachers will not return to work – not after tasting money much bigger than their teaching salaries once they accept to roll up their sleaves and touch the soil – Uganda’s fertile soil.
After being hit by MD Byarugaba’s golden punch, withdrawal of 20% before full term is not likely to appeal to (m)any NSSF members. One would have to weigh the loss to be made by eating a fifth of your nest eggs today when you are still strong instead of letting them earn compound interest to enjoy when you retire.
Actually, many people have already learnt the secret although they are not shouting about it. Statistics from NSSF indicate that 3.2% of the members already qualified to take their savings after attaining the age of 55 years. But they are staying put! For every year they stay in NSSF, their nest egg grows by 10%.
A whopping 256 billion shillings in NSSF belongs to guys (and ‘chicks’) aged 55 – 60 years. And another 104 billion shillings belongs to fellows over 60 years of age. They have discovered the secret of compound interest and like a certain leader said, they aren’t going anywhere soon.
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