By Michael Kanaabi Dollar
The saying that when it rains it pours seems to apply perfectly to NSSF which has just been in the negative spotlight over the past few months over a number of issues that culminated into a Parliamentary special committee investigation and report with tough recommendations.
This time round a long term saver with the fund Waibale Simon Calvin NSSF No. 7617700034515 has vowed to sue the country’s largest pension fund over what he called ‘creative accounting’ in regards to interest on his accumulated savings and computation of his midterm benefits.
How did it begin?
After Parliament passed the NSSF Amendment which gave savers with the fund access to 20% midterm benefits and the President assented to it in January 2022, Waibale Simon like many other Ugandans who qualified applied for their benefits.
According to records obtained by this publication, Waibale applied for his midterm benefits and in May of 2022 got paid the sum of shillings 107,781,221 million which was taken off shillings 538,966,103 million leaving with shillings 431,124,882 million.
Earlier on at the beginning of the financial year 2021-2022 in which he got paid his benefits, the Finance Minister as mandated by law had announced an interest pay out of 9.65%, this interest was supposed to be then credited to his account based on the opening balance then which was over shs 531,000,000 million but this wasn’t done.
The anomalies
Instead NSSF gleefully credited this interest to his account on 1st October 2022 having computed it over the balance left being shs 431,124,882 million after Waibale was paid his midterm benefits in the process making him lose over shs. 9,000,000 million which he would get in addition had the interest been computed and credited at the right time which was the beginning of the financial year 2021-2022 when the Minister announced it as stipulated by law.
“To further expose the laxity of the fund when it comes to effectively reconciling savers accounts, this money arrived in a another financial year 2022-2023” Waibale noted.
As if that is not callous enough on further examining his contributions account statement, he realized NSSF had gone backwards and made entries into closed off accounts from back in the early 2000s while computing his midterm benefits something which goes against known accounting principles and standards also bordering on an illegality as whatever was done should apply directly to the current balances and not be worked backwards to advantage the fund over the saver.
Raising an alarm
Like any responsible citizen would do, Waibale raised a complaint to NSSF’s customer care and complaints desk through emails seen by this publication to which the fund’s team at this desk responded with a confirmation that all was well and the fund had committed no wrong in handling the complainant’s account.
Taking the legal course
On failing to get a satisfactory response from the fund, Waibale instructed his lawyers Pentagon Advocates to lodge a formal complaint on his behalf to the regulator Uganda Retirement Benefits Regulatory Authority (URBRA) and a letter was quickly penned to the later asking them to intervene in the creative accounting’ NSSF had subjected Waibale’s contributions to.
“ In December 2022, we wrote to URBRA asking them to task NSSF to fix our client’s issue given they are the pension sector regulator, besides the delayed response they didn’t do much beyond writing to NSSF a letter to clarify on the complaint in February 2022. NSSF’s reply wasn’t satisfactory either only this time it came from a higher office of the Acting Managing Director of the fund stating factually what they had done but denying any wrong doing” Louis Kizito Counsel to the complainant at Pentagon Advocates says.
This left us with no option but to notify NSSF about our intention to sue and have this matter concluded in the courts of law something we are pursuing right now.
What are the wider implications?
As matters stand, a forensic audit into the way NSSF treated contributors accounts especially those who qualified for mid term benefits could uncover wide spread discrepancies first around going back to closed off accounts and making entries in them in the guise of putting together the midterm package which in proper accounting principles is not acceptable as seen in the NSSF contributor’s statement of Waibale Simon the complainant.
If this is done on a large scale to benefit the fund at the expense of contributors given about 15000 beneficiaries got mid term benefits in the months immediately after the law came into operation, an illegality built on creative accounting which borders on large scale fraud may have been committed by the fund.
Secondly given Waibale is estimated to have lost over 9 million shillings in would be interest as a result of the negligence or deliberate act of the fund to delay applying the 9.65% interest declared by the Minister for 2020-2021 onto his opening balance of 2021-2022 as required by law and instead applied to the balance after his midterm benefits were paid, if the case is the same for thousands of Ugandans who got their midterm benefits, all the contributors affected by this anomaly may have lost hundreds of billions of shillings in total in interest payments to the fund.
And finally given the interest due to Waibale which was supposed to be applied to his savings as of July 1st 2021 and credited to his account immediately after showed up in the next financial year 2022-2023 (between September and October 2022), it implies that if this is the standard mode of operation for the fund in regard to contributor interest payments, savers who got their full term benefits in the financial year 2022-2023 may have lost out completely on their interest due in that year given by the time it was paid out they were no longer members of the fund although that interest was owed to them by NSSF. Putting it politely that looks like fleecing of savers of billions of money due to them in interest although the legal and accounting implications of this are much graver.
Email: michaelkanaabi@gmail.com
WhatsApp: +256701133509
Do you have a story in your community or an opinion to share with us: Email us at Submit an Article
