By KABONA ESIARA

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A parliamentary committee has unearthed gross abuse at a public provident fund body, the National Social Security Fund (NSSF), a vice that has muted growth of returns and penetration in Uganda’s pensions industry.

The committee has recommended that the Labour minister, top managers, board members, and some senior officials at the fund step down within seven days and called upon the Inspectorate of Government and Auditor-General to do a forensics audit and prosecute the culprits.

Uganda’s pension sector coverage ratio stood at 18 percent against a 15 million working population by the close of December 2022 due to challenges linked to penetration, translating into a coverage base of 2.95 million employees. This excludes 12.3 million workers from access to pension and social security savings schemes, which has been largely blamed on NSSF’s mismanagement and inability to mobilise more potential savers.  About two million employees contribute monthly savings to the National Social Security Fund.

“In Uganda, 2.95 million people are enrolled in retirement benefits funds. The penetration of pensions among the working population is still low,” the MPs report says. In East Africa, Kenya has the largest workers coverage ratio, at 20 percent.

Interest rate

The NSSF announced a 9.65 percent interest rate for its members for the year ended June 30, 2022, the lowest earning in more than 10 years, blamed on mid-term access to the contributions for reducing the resources, but the parliamentary probe cites corruption, influence peddling, wasteful spending for holding back the growth of the fund and return on investment.

“Scandals are back to haunt savers and impacting negatively on the fund’s reputation,” Mwine Mpaka, the parliament’s select committee chairperson who investigated the NSSF saga said while presenting the report to Parliament on Wednesday.

The payment of Ush752.6 million ($202,000) in settlements for former deputy managing director Geraldine Ssaali Busulwa, who had been forced out in what a court found wrongful action, was suspect. Despite awarding Ush272 million ($73,000) as the court ordered, the fund approved Ush752.6 million ($202,000), according to the committee findings.

Early exit package

The fund also gave an early exit package to Fred Mwesigye and Julius Bahemuka. Each of the board members was given Ush311.7 ($83,750).

NSSF was further plunged into losses when the Arua Investment property valued at Ush2.3 billion ($619,388) and Ush2.6 billion ($700,177) smart card systems which have never worked and an additional 121.9 million ($32,850) on the podium and air tickets for officials to travel.

The committee was further concerned that the NSSF board approved Ush33.3 billion ($8.8 million) in employee bonuses in 2020/2021 and 2021/2022 at a time when the fund recorded a decline of three percent in dividends.

Expensive to maintain

NSSF board was found to have been the most expensive to maintain in the region putting more pressure on funds balance sheets, even as five of them including Patrick Ocilap, deputy secretary to the treasury, Silver Mugisha Managing Director National Water and Sewerage Corporation. Aggrey Kabenge PS Labour and Annet Mulindwa Nakawunde, MD Finance Trust, were already receiving 10 percent monthly contributions from the fund to NSSF yet they were getting an additional 10 percent pension from the public service.

“There exists no employee-employer relationship between the board members and NSSF to warrant such contributions. The committee further notes that such contributions are not provided as a benefit a member of the board is entitled to, under the Board Charter,” the report said.

The committee also recommended that the board members who received the contributions should refund the money within seven working days after the adoption of the report or face prosecution.

The committee was further concerned that the board approved an expenditure of Ush33.3 billion ($8.8 million) in employee bonuses in 2020/2021 and 2021/2022 at a time when the fund recorded a decline of three percent in dividends.

“The bonuses paid by the board, without declaring the set targets for the financial year or third-party verification that the fund has met the target all amount to an abuse of the funds available to savers,” Mwine Mpaka added.

The former managing director, Richard Byarugaba, and the acting managing director, Patrick Ayota as well as the fund’s management team have been asked to step aside to pave way for investigations by the Inspectorate of Government (IGG) for the offences of abuse of office and corruption.