NSSF Says Members Should Expect Reduction in Interest Rate


NSSF Managing Director, Richard Byarugaba
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Members of Uganda’s biggest pension fund, NSSF, will receive a lower interest rate for the financial year 2018/19, the Fund announced on Tuesday.

The low rate is on account of a drop in its total income compared to the previous year, the Fund’s Managing Director, Richard Byarugaba said.

While addressing reporters at Workers House in Kampala, Byarugaba said that while the Fund’s revenue which includes interest, dividend and rental income increased by over 20 percent to Shs 1.3 trillion, overall income reduced by over Shs 402.8 billion due to a decline in regional equity prices and currencies.

For instance, the Nairobi Stock Exchange lost 14%, the Uganda local share index shade 10% while Tanzania plummeted by over 21%.

Consequently, the share prices closed below the prices registered at end of the previous financial year, which impacted the performance of  our equity portfolio, he said.

“Further, there was general depreciation of the regional currencies against the Uganda Shilling. Both the Kenya and Tanzania currencies depreciated by 6.1% against the Uganda Shilling,” Byarugaba said.

He said that given the Fund’s performance this year, it will not match the 15% interest rate paid in 2017/2018.

The Minister of Finance, Matia Kasaija will declare the new interest rate at the Annual Members Meeting scheduled for September 27, 2019.

The lower interest rate notwithstanding, the Fund will still pay a competitive return, at least 2 percentage points above the 10 year average rate of inflation, the Managing Director added.

“Since fiscal year 2012/2013, we have consistently delivered on that commitment. I am therefore extremely confident that the Minister will declare a rate that will achieve and even surpass this target. This promise which we started fulfilling in the FY 2012-13 will be maintained this year”.

Byarugaba also assured members that the Fund is stable and financially sound, and continues to grow both in value and membership.

The Fund”s assets under management increased by 13.1% from Shs 9.9 trillion to Shs 11.3 trillion at end of June 2019, mainly driven by increased contributions and interest income. Contributions increased by 15%, from Shs 1.0 trillion to Shs 1.2 trillion.

“Our members should be confident about the health of the Fund in  the short, medium and long term as the Fund remains financially stable and growing”.

“We have the ability and means to withstand any shock in the economy, given our aggressive but prudent investment approach and our investment diversification strategy. Safety and Security of members’ funds will remain the guiding principle in our decision making,” he said.

Last year, NSSF announced an interest payout of 15% on members’ savings for the financial year 2017/2018, the highest interest rate that the pension Fund has ever declared.

It equated to Shs 1.1 trillion to be paid out in interest to members of the Fund and is a 3.7% increment compared to the previous year.

Over the period of six years since 2012, NSSF’s interest has increased by 5%.

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