Workers’ Member of Parliament Dr. Sam Lyomoki has warned against repealing the National Social Security Fund (NSSF) Act, saying it’s dangerous for workers in the country. He was appearing before the Finance Committee of Parliament, which is discussing the Retirement Benefits Sector Liberalization bill, 2011.
The bill seeks to repeal the Pensions Act, Cap 286 and the National Social Security Fund (NSSF) Act, Cap. 222. It also seeks to open up the pension sector that will consequently end the monopoly of the National Social Security Fund (NSSF) allowing competition among private pension schemes.
It also seeks to allow those who have saved money for more than 10 years to access 30 per cent of their savings to secure mortgages or loans from any financial institution for house purchase.
Dr. Lyomoki, who doubles as Secretary General of the Central Organisation of Free Trade Unions (COFTU), says that while he supports the proposal to give workers party of their savings to secure mortgage, he is opposed to repealing the NSSF Act in its entirety.
He instead argues that the act Act should be amended to include proposals in the pension reforms bill. Dr. Lyomoki told the committee chaired by Rubanda East MP, Henry Musasizi that if the Retirement Benefits Sector Liberalization bill is to proceed, it should go in tandem with amendments to the NSSF Act.
Dr. Lyomoki said that the Retirement Benefits bill doesn’t come out clearly on the safety of worker’s savings yet it is the mandate of the government to ensure the safety of workers savings.
“It does not make any sense to repeal a strong Act like the NSSF Act and replace it with a weaker law that does not guarantee the security of member’s savings as required by International Labour Organizations (ILO),” said Dr. Lyomoki.
Adding that, Section 35 of the NSSF Act guarantees annual interest credit to members which action preserves, protects and secures member savings.”
Christopher Kayirita, the Chairman General of COFTU says that the pension sector should be partially liberalized by leaving NSSF to operate with an improved Act and also allow other private schemes to operate.
He expressed disappointment that the bill is motivated by competition in the pension sector as well as capital mobilization rather than social security forces.
Kayirita told the committee that the spirit of any law in the Social Security Sector should be to improve social security as the primary aim and then the other economic imperatives like competition and capital mobilization come second.
He also said that the bill’s proposal to lower employee threshold from 5 to 1 contravenes a provision in the NSSF Act which requires that statutory eligibility to social security is limited to employers with 5 or more employees.