{"id":66505,"date":"2024-02-08T07:05:51","date_gmt":"2024-02-08T07:05:51","guid":{"rendered":"https:\/\/www.africa-press.net\/uganda\/?p=66505"},"modified":"2024-02-08T06:42:47","modified_gmt":"2024-02-08T06:42:47","slug":"nssf-incurs-deficit-of-shs794b-due-to-members-interest-payments","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/uganda\/all-news\/nssf-incurs-deficit-of-shs794b-due-to-members-interest-payments","title":{"rendered":"NSSF incurs deficit of Shs794b due to members\u2019 interest payments"},"content":{"rendered":"

Africa-Press – Uganda. <\/strong><\/span>National Social Security Fund (NSSF) incurred a deficit of Shs794b in the period ended June 2023 due to payment of interest to members beyond available amounts<\/b><\/p>\n

The deficit, Auditor General John Muwanga, said therefore, resulted into accumulated members\u2019 funds that during the period exceeded the total Fund assets by Shs508b.<\/p>\n

\u201c[NSSF] had accumulated deficit of Shs794b resulting from allocation of interest to members\u2019 accounts exceeding amounts available for the allocation of interest. As a result, accumulated members\u2019 funds exceed total Fund assets by Shs508b,\u201d the Auditor General wrote in a report for the period ended June 2023. It was not immediately clear how the deficit had been accumulated and the period it covered.<\/p>\n

Monitor<\/b> contacted different NSSF officials, including managing director and acting managing director Patrick Ayota and Paul Kasaato, respectively and Mr Victor Karamagi, the Fund\u2019s public relations manager for a comment but they offered no explanation even as they indicated they would revert.<\/p>\n

Uganda Retirement Benefits Regulatory Authority (URBRA), which regulates the pension and retirement benefits sector, indicated on Monday it was aware of the anomaly but had asked NSSF to see that it is resolved as soon as possible given that it has the potential to \u201cdistort the market.\u201d<\/p>\n

\u201cWe got to know about it [deficit] and we took action. We are already monitoring how the whole process goes in the strongest terms possible,\u201d Mr Martin Nsubuga, the URBRA chief executive officer, said without giving details.<\/p>\n

Mr Allan Lwetaba, a chartered financial analyst, explained that the deficit could have arisen from NSSF\u2019s inability to earn projected income from its investment vehicles, yet it is required to offer a competitive return on member savings that is 2 percentage points above annual inflation.<\/p>\n

\u201cThe reason could have been that NSSF [earned] reduced income from these assets [investments it has made in fixed income, treasury bills and bonds, and real estate] than anticipated, which affected their financial obligations, yet the entity had to pay out interest,\u201d he said.<\/p>\n

During the period, NSSF income from investments increased by 15 percent, from Shs1.9 trillion to Shs2.2 trillion, which allowed the Fund to increase its paid benefits by 1 percent, from Shs1.189 trillion to Shs1.199 trillion.<\/p>\n

The Fund also calculated an interest for the period of Shs1.6 trillion, or 10 percent for each saver, which meant that it had to credit members\u2019 accounts with at least Shs2.799 trillion including benefits and interest.<\/p>\n

However, during the period, NSSF indicated it had earned Shs2 trillion from its investments in government bonds in Uganda and Kenya, while dividend and real estate income raked in Shs145.1b and Shs11.95b, respectively, which totalled to Shs2.157 trillion.<\/p>\n

The income, Mr Lwetaba said might have been lower than projected given that the Fund during the period also lost Shs1.05 trillion due to a mix of capital flight, foreign exchange losses and constrained cash-flow from cross-border equity investments.<\/p>\n

Restrictions on reserves<\/b><\/p>\n

Mr Lwetaba also indicated that the ability by pension funds to pay member interests without incurring deficits has been impacted by URBRA\u2019s measures, in which it directed about eight years ago that pension funds could only put 10 percent of investable income in reserves.<\/p>\n

\u201cThis reduced returns of many pension funds since, at this point, they can\u2019t tap into their reserves to compensate for much of their deficits. This means that in a year where they record negative or reduced returns on their investments, they will record big deficits on their balance sheets,\u201d he said.<\/p>\n

However, he noted that given NSSF\u2019s investment portfolio, it has the ability to correct the deficit in year if it places ultimate determination on it with close monitoring.<\/p>\n

During the period ended 2023, NSSF indicated in its annual report that the Fund held Shs112b in reserves, which was too little to correct the Shs794b deficit.<\/p>\n

For More News And Analysis About Uganda<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Uganda. National Social Security Fund (NSSF) incurred a deficit of Shs794b in the period ended June 2023 due to payment of interest to members beyond available amounts The deficit, Auditor General John Muwanga, said therefore, resulted into accumulated members\u2019 funds that during the period exceeded the total Fund assets by Shs508b. \u201c[NSSF] had […]<\/p>\n","protected":false},"author":84,"featured_media":66504,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5,7],"tags":[233,240,234],"class_list":["post-66505","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","category-head-lines","tag-africa-press","tag-africa-press-uganda","tag-uganda"],"yoast_head":"\nNSSF incurs deficit of Shs794b due to members\u2019 interest payments - Uganda<\/title>\n<meta name=\"description\" content=\"National Social Security Fund (NSSF) incurred a deficit of Shs794b in the period ended June 2023 due to payment of in ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/uganda\/all-news\/nssf-incurs-deficit-of-shs794b-due-to-members-interest-payments\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"NSSF incurs deficit of Shs794b due to members\u2019 interest payments\" \/>\n<meta property=\"og:description\" content=\"National Social Security Fund (NSSF) incurred a deficit of Shs794b in the period ended June 2023 due to payment of in ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/uganda\/all-news\/nssf-incurs-deficit-of-shs794b-due-to-members-interest-payments\" \/>\n<meta property=\"og:site_name\" content=\"Uganda\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2024-02-08T07:05:51+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2024\/02\/sm_1707361715.15852.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"720\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/nssf-incurs-deficit-of-shs794b-due-to-members-interest-payments#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/nssf-incurs-deficit-of-shs794b-due-to-members-interest-payments\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"NSSF incurs deficit of Shs794b due to members\u2019 interest payments\",\"datePublished\":\"2024-02-08T07:05:51+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/nssf-incurs-deficit-of-shs794b-due-to-members-interest-payments\"},\"wordCount\":657,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/nssf-incurs-deficit-of-shs794b-due-to-members-interest-payments#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2024\/02\/sm_1707361715.15852.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-Uganda\",\"uganda\"],\"articleSection\":[\"all news\",\"economy\",\"head lines\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/uganda\/all-news\/nssf-incurs-deficit-of-shs794b-due-to-members-interest-payments#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/nssf-incurs-deficit-of-shs794b-due-to-members-interest-payments\",\"url\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/nssf-incurs-deficit-of-shs794b-due-to-members-interest-payments\",\"name\":\"NSSF incurs deficit of Shs794b due to members\u2019 interest payments - 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