Uganda’s NSSF (National Social Security Fund) recently declared an interest rate of 9.65% for the period 2021/22. This is not the highest return in the world but it is a fair one. NSSF has about 1.3 million members of which only 620,000 are active. The fund currently manages over ugx 17 trillion in assets. Most of the investments are government bonds and bills.
I joined NSSF as a member in 2007. I had just completed my undergraduate degree in Civil Engineering from Makerere University and had recently joined Deloitte as an associate. At the time I really didn’t understand or care what NSSF was. My only concern was that each month my employer deducted 5% from my payslip and remitted it to NSSF. My employer was also required by law to add another 10% on top of my 5% which would bring my monthly saving to 15%.
NSSF has been a game changer in helping me and other Ugandans prepare for retirement. First; NSSF has enabled me to accumulate a sizeable nest egg. I have been lucky to remain in continuous employment for the last 15 years. I have also been lucky to earn decent pay which has grown steadily every year. I have also been lucky to work with employers who have consistently remitted my 15% to NSSF. This combination of facts has allowed my fund balance to compound at an ever-growing rate. By the time I officially retire in 17 years, I will be quite wealthy. If my employer had paid me this cash instead, I highly doubt I would have anything much to show for it!
Second; NSSF has given me a platform to share some of my financial knowledge through their financial literacy programs. I have spoken as a panelist on several of their engagements and it has been quite rewarding. I have interacted with thousands of members through this program. NSSF has been instrumental in trying to change the narrative around promoting a savings culture and economically empowering people through financial literacy.
Third; My business has directly benefited from the NSSF Hi-Innovator program. The Hi-Innovator program seeks to promote local entrepreneurship through training and funding. Our cottage manufacturing business which makes food condiments, juice, and laundry bar soap has benefited from free capacity building, networks, and possible funding.
Fourth; I have seen the fund evolve into a professionally run institution. I can view my fund balances on their app and website. They have supported the local financial markets and have participated in many IPOs (Initial Public Offerings.) Through these equity investments, members (including myself) now own a small portion of some of the big businesses around town. They are also a key investor in government securities and therefore directly support the government to provide public services. They are now helping to shape the real estate market with different projects for different income levels. NSSF is now directly supporting local entrepreneurs to grow their businesses. The fund was also instrumental in amending the law which has enabled many people to access 20% of their money at 45 years.
Fifth; The fund is also actively trying to increase membership. The fund is now encouraging voluntary savings to help people especially in the informal sectors and self-employment world save for retirement. Anyone can save as little as ugx 5,000 with NSSF on a daily, weekly, or monthly basis through the voluntary scheme. I have demonstrated in previous posts how saving 5k daily with NSSF can amount to over ugx 650 million in 35 years! This is more cash than what an average Ugandan retires with! It is easy to delude yourself that you don’t need to save for retirement if you’re self-employed. This is a mistake. It is highly unlikely that your business will survive into your retirement. It is also unlikely that as you age you will have the same energy to keep hustling as you did when you were younger. So a safe bet is to consistently take a portion of your earnings and put it in a retirement fund like NSSF where you can’t touch the cash for a very long time!
Overall NSSF is a good retirement vehicle and I would highly recommend everyone to have a portion of their income invested with NSSF.