The National Social Security Fund (NSSF) announced a noteworthy decline in the number of savers opting to withdraw their accrued benefits, as outlined in its annual performance report released on Tuesday for the fiscal year ending June 30, 2024.
The report indicates a reduction of 3,865 withdrawal applications, reflecting a growing confidence among savers in the Fund’s ability to manage their investments effectively.
In the financial year 2023/24, the total benefits paid out decreased to UGX 1.120 trillion from UGX 1.199 trillion in the previous fiscal year. This drop in claims, from 48,115 to 44,250, underscores a shift in savers’ behavior, with many choosing to retain their contributions rather than withdraw.
“People who qualify to withdraw their savings are opting not to because they trust the Fund to not only ensure safety but also growth in the value of their money,” stated NSSF Managing Director Patrick Ayota during the report’s presentation. He emphasized that this trust is a significant responsibility that the Fund does not take lightly.
The report highlighted a sharp decline in midterm benefit payments, which fell from Ugx 272.2 billion to Ugx 176.6 billion, marking the lowest payout in this category since the introduction of access to benefits for savers. This trend reflects a broader confidence in the Fund’s investment strategy and future growth prospects.
In contrast, NSSF’s income surged by 15% over the same period, increasing from Ugx 2.2 trillion to Ugx 2.53 trillion. This growth was primarily driven by significant rises in interest income, dividend income, and returns from real estate investments. Interest income alone rose from Ugx 2 trillion to Ugx 2.34 trillion, while dividend income from both listed and unlisted equities climbed from Ugx 145.1 billion to Ugx 175 billion. Real estate returns also saw an uptick, moving from Ugx 11.9 billion to Ugx 13.3 billion.
Ayota attributed these positive outcomes to improvements in the investment climate across Uganda and East Africa. “Our analysis shows that despite the challenges, the last financial year was better compared to 2022/2023, with Uganda’s economy recovering to a 6% GDP growth and controlled inflation rates,” he noted. He also pointed out that regional stock markets have rebounded, and interest rates have slightly increased.
The Fund achieved a remarkable milestone in asset growth, surpassing its target of Ugx 20 trillion well ahead of the 2025 deadline. As of June 2024, NSSF’s total assets reached Ugx 22.13 trillion, reflecting a 19.2% increase from the previous year. This positions NSSF as the largest fund by value in East Africa.
Member contributions also experienced a significant boost, rising by 12.2% to Ugx 1.93 trillion. Moreover, the Fund’s cost of administration improved slightly, decreasing from 1.02% to 1.00% of total assets, even as the cost-to-income ratio saw a marginal increase from 8.66% to 8.77%.
Looking ahead, NSSF has launched its ambitious Vision 2035 initiative, which aims to grow the Fund to Ugx 50 trillion, extend social security coverage to 50% of Uganda’s working population, and achieve a service satisfaction level of 95% by the year 2035.
As the NSSF continues to evolve and adapt to changing economic conditions, its focus remains steadfast on safeguarding and growing the assets of its members, reinforcing the importance of trust and security in Uganda’s social security framework.
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