Social security in Uganda has made remarkable strides in the recent years especially given the exponential growth of National Social Security Fund (NSSF) which stands at 30 percent per year, supplemented by profitable investments.
In fact NSSF is the biggest pension scheme in East Africa with 1.6 million members and a value of Ushs 5.8 trillion.
However, while this should translate into a secure future for NSSF’s beneficiaries financially, the Fund’s Managing Director Richard Byarugaba is concerned that most of them (members) eventually squander their savings.
This he says in turn exposes the beneficiaries to destitution.
In an interview with ChimpReports this week, Byarugaba disclosed that NSSF is developing a system through which its members will be offered financial literacy to enable them benefit from their savings.
He added that a research by NSSF indicated that 70 percent of employees in Uganda have no other form of saving besides NSSF. Of these, 90 percent spend their benefits within just 2 years.
“Most people are used to a monthly salary and stand a bigger chance of misusing the lumpsum benefits they get from NSSF. We want them to put it to good use and get regular income to help them in old age,” he told Chimpreports.
The new product set to begin next year will offer discounts to members and they will as well earn points from saving with the Fund.
In addition, they will receive training on financial literacy and opportunities through which they can properly invest their benefits.
Byarugaba pointed out some of the viable investment alternatives including; fixed income, treasury bills/bonds, stock exchange and investing in real estate for either rental or capital gains.
He was however quick to add that; “All these options have risks that must be weighed by the person intending to invest. For example, despite their high returns, real estate and equities can be so risky. Fixed income is relatively less risky since it can easily be turned into cash.”