Business

COVID-19 Crisis: Rwakakamba Takes NSSF to Constitutional Court over 20% Pay for Savers

Morrison Rwakakamba, the Chief of Executive Officer of Kampala-based think tank, Agency think Transformation (Aft) has sued National Social Security Fund (NSSF) seeking orders to compel the retirement benefits institution to give members 20% of their savings during this COVID-19 crisis.

Rwakakamba argued in a petition filed before the Constitutional Court this Monday afternoon that sections of the Constitution are “restrictive” and deny majority of the fund beneficiaries their “right to livelihood” and are in contravention of local and international laws.

Following the recent outbreak of COVID-19 and it’s impacts on the economy, there have growing calls for the Fund (NSSF) to pay it’s members 20% of their accumulated balances.

This is because the recent closure of businesses to combat the spread of COVID-19 is increasing unemployment and failure to service loan obligations.

NSSF Managing Director Richard Byarugaba has since warned the economy will pay a price is compelled to pay 20% of savings to clients.

“We believe this proposal has implications that will distress the sustainability of NSSF as a retirement scheme and the economy as a whole,” said Byarugaba in a letter to Finance Minister Matia Kasaija.

However, Rwakakamba argued that the COVID-19 crisis has denied many people a livelihood hence the need for relief in terms of 20% of savings.

He also sought an order directing NSSF to within two months from the date of judgement to foster the amendments to the NSSF Act in a manner that guarantees members their rights under the 1995 Constitution of Uganda and other rights under International Instruments ratified by Uganda.

But a Kampala-based lawyer who preferred anonymity to speak freely told ChimpReports that “The suit wasn’t well drafted“ since “Court cannot order Parliament to table a bill.“

“Court is likely to dismiss all orders sought but it will have something to say on the declarations…”

Ready to pay

Byarugaba has since expressed readiness to pay 20% to savers as long as the law is passed by Parliament.

He, however, warned that the Fund “could collapse” due to underperformance in the long-run especially it becomes less attractive to savers.

Byarugaba also revealed that the total membership of of the Fund today is 2.3 million with a core membership of 1.2 million.

Core members are those with balances on their accounts.

“Of the 1.2 million, 53 are active and 47% are dormant. Active members include those that make at least one contribution in a year. 100,000 members or about 8.3 %  of the core members own 75% of the fund,” said Byarugaba.

“About 1 million active members (80%) have balances below Shs 10m and 7% have balances greater than Shs 50m. Thus, this proposal (20% payout) will not address the wider need for a relief and yet it leaves irreparable damage on the economy and financial system,” warned Byarugaba.

Tags
Back to top button
Translate »

Adblock Detected

Please consider supporting us by disabling your ad blocker