The National Social Security Fund (NSSF) has increased its interest rate from 10 to 11.23 per cent for the financial year 2012/13 in an effort to offer a better return to its members as inflation continues to hurt household incomes.
NSSF Managing Director Richard Byarugaba said the new rate is above the average inflation of 9.23 per cent.
“Our focus is to provide a reasonable return to members, without compromising the safety of their savings; therefore, in the long term, the fund must preserve member funds,” he said during a function at which the new rate was revealed at the ministry of Finance offices yesterday.
The new rate will see fund members’ earnings increase from Shs 202bn paid in 2011/12 to Shs 287bn. The rate will be calculated and credited on the balance on the member’s accounts as of July 1, 2012.
Announcing the new rate, the minister of state for Finance, Planning and Economic Development, Matia Kasaija, commended the improved performance of the fund, which he attributed to strategic exploitation of investment opportunities.
NSSF earned Shs 13bn from its investment in the Umeme IPO, of which Shs 2bn was a dividend and Shs 11bn was from capital gains. Byarugaba further revealed that the fund would focus on long-term investments that have better yield.
“Our strategy is to move from short-term assets to long-term assets … gradually we [shall] reduce our short-term liquidity,” he said.
The fund hopes to invest in treasury bonds and stocks in the East African Community so as to widen it scope of investment. NSSF’s asset base has grown by 27 per cent, from Shs 2.7 trillion in the financial year 2011/2012, to Shs 3.5 trillion currently.