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NSSF: Parliament probe report found no evidence of misuse of funds

The Parliament Select Committee report on the status of the National Social Security Fund (NSSF) found no evidence that member funds were stolen or misused by the board or Management.

Announcing the Fund’s response to the Parliament report for the first time, NSSF Board Chairman Dr. Peter Kimbowa told the media at Workers House in Kampala on Monday, March 13, 2023, that the absence of any such evidence is also an affirmation that members’ savings can be trusted with the Fund.

“In effect, the committee report brings to light the fact that the famous 6Bn was never disbursed, nor was the 1.8Bn shared among board members. The work plans had not been approved by the board.”

“The current NSSF Board has not and will not compromise our fiduciary duty to all NSSF members to ensure prudent and profitable management of the Fund,” he said.

On March 01, 2023, the Committee Chairman Hon Mwine Mpaka, presented the report to Parliament, whose recommendations were adopted last week on March 09, 2023. The committee had earlier been selected by the Speaker of Parliament to investigate the alleged mismanagement of NSSF.

Dr. Kimbowa added that the Fund only refrained from responding to the report to enable the Parliamentary process to take its course, but that should in no way be construed to mean that the Fund agrees with all the contents, and conclusions of the report.

“In some instances, we find the report devoid of important context and contains inaccuracies, especially regarding investments. For instance, the Fund has a total of 210 investments, however, only one, the West Nile Golf Club, has lost value. In our opinion, the fact that the Committee had to go back almost two decades to find one investment that has lost value shows that the Fund has had a stellar performance over the years,” he said.

Patrick M. Ayota, the Ag Managing Director also said that whereas the report highlights areas where the Fund must improve, the Committee did not consider the context or information provided in many instances.

“For instance, our investment philosophy is guided by the Investments Policy and Guidelines and the URBRA Investment Guidelines. One key component is the principle of investment diversification – both in terms of asset class and sector. This basic rule behind the principle of diversification is a realization that not all investments will perform well all the time.”

“Therefore, any fund’s investment performance must therefore be analyzed in terms of the entire portfolio, rather than cherry-picking as the committee did. An analysis of the Fund’s investment portfolio over the last 12 years shows consistent growth of the assets and a competitive return,” Ayota said.

He also pointed out that the Fund noted instances where the committee appears to not have considered the facts availed by the Fund.

“For instance, the issue of onboarding of Geomapping technology to help the Fund easily trace employers. We clearly demonstrated that the technology is fully operational and there is value for money. Other areas where the committee did not consider facts include payment of performance bonuses, Corporate Social Responsibility, penalty waivers, and legacy investments like West Nile Golf Club and Workers House land title,” he said.

Ayota said that the committee agreed that the facts about the Fund’s performance are indisputable and assured NSSF members and the public of the Board and Management’s commitment to ensuring the security and safety of members’ savings.

NSSF’s Decade of Growth – Facts & Figures:

  1. The Fund’s Assets Under Management have increased from UGX 1.7 trillion to UGX 18 trillion in just 12 years.
  2. NSSF is the only noteworthy mobiliser of a large pool of long-term domestic capital for development funding, which has enabled the Government to become less reliant on foreign capital.
  3. NSSF has consistently grown the value of members’ savings by paying a real return, better than our peers in the region
  4. NSSF has the lowest cost of administration at 1.17%, not only among peers in the region but better than the global benchmark of 2.20%
  5. Through efficient systems, the Fund pays all qualifying members their benefits when they are due in just 7 days on average.

Source: NSSF official website.

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