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Finance Ministry Wants Sole Control Over NSSF

However, Ajedra says splitting the oversight of a large institution like NSSF is a recipe for disaster because it puts the fund at risk, saying this will create “a stalemate in decisions” and “supervisory loopholes.”
08 Oct 2019 19:28
Finance ministry proposes controls for mid term access

Audio 7

The Finance State Minister in Charge of General Duties, Gabriel Ajedra, wants the supervision of the National Social Security Fund-NSSF placed entirely under the Finance Minister.

He was presenting the Ministry’s position to the joint Gender and Finance Committee of parliament on the NSSF Amendment Bill, 2019. The bill seeks to amend the NSSF Act 1985 to among others include a provision that NSSF be supervised by the Finance and Social Security Minister and also allocate the roles for the Public Service Minister in the management of NSSF. 

    The Bill provides that the Minister for Finance should oversee Fund management while the Social Security Minister should oversee policy matters of NSSF. However, Ajedra says splitting the oversight of a large institution like NSSF is a recipe for disaster because it puts the fund at risk, saying this will create “a stalemate in decisions” and “supervisory loopholes.”    

 

He says the Finance ministry should oversee NSSF because of its importance in the economy. For instance, NSSF currently has assets worth Shillings 10 trillion, which is 10 percent of Uganda’s GDP of Shillings 100 trillion.   

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Last month, Ajedra disagreed with the Gender Minister, Janat Mukwaya on the bill before the joint committee. Mukwaya defended the Bill on the basis that it was approved by cabinet, while Ajedra urged MPs to reconsider some of the provisions including the oversight of NSSF. 

  The Gender Committee Chairperson, Alex Ndeezi wondered why the Finance ministry still has divergent views on the Bill yet it issued the Certificate of Financial Implications and that ministers should have ironed out their differences at cabinet level.     

Ndeezi, who is also a representative for Persons with Disabilities, asked Ajedra if he needs more time to ensure that the two ministries don’t cause drama on the floor of Parliament, when the committee presents a report on the Bill supporting multiple supervision of the Fund.                    

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Ajedra told the committee that the ministry of Finance needs more time to meet with the Gender Ministry to harmonize positions on the Bill. Ndeezi and the Finance Committee chairperson, Henry Musasizi, government will decided among other provisions who should supervise NSSF should the two ministers fail to agree.  

 

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Ajedra told Uganda Radio Network-URN that while the Gender Ministry consulted Finance on the Bill and that cabinet by consensus supported the Bill, the Finance Ministry isn’t contented with the provisions on oversight, capping the levy NSSF should pay to Uganda Retirement Benefits Regulatory Authority-URBRA and taxing benefits of members who withdraw before attaining 60 years.  

He says the taxation provision should be deleted because it contravenes the Constitution and URBRA Act, 2011, which exempt pension and retirement benefits from taxation.          

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Ajedra asked the committee to delete the provision of NSSF directly lending to government because the URBRA Act allows lending only through securities sold on the open market to protect member’s funds from risks associated with investment in non-tradable instruments.  

He argued that NSSF lending to government in the form of loans is risky because loans are subjected to “negotiations and non-market based decisions aimed at getting the cheapest loan”.  Currently, NSSF holds 75 percent of the government treasury bills and bonds.  

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Musasizi told Ajedra that there have been several demands from the general public on the need for midterm access, not just for voluntary contributors as proposed in the Bill.   

   

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Ajedra says that the midterm access provision could be reconsidered based on statistical evidence to set conditions for members who have saved for a minimum of ten years and also aged over 45 years.