Kampala, Uganda | URN | Uganda Retirement Benefits Regulatory Authority (URBRA) has rejected the provision that caps the levy National Social Security Fund (NSSF) should pay to the regulator at 0.05 percent.
The National Social Security Fund Amendment Bill among others seeks to amend the NSSF Act, 1985, to provide for mandatory contributions from all workers in the formal and informal sector and also provides that NSSF shall pay a levy of 0.05 percent of its total assets to URBRA.
URBRA Chief Executive Officer, Martin Nsubuga, says that the provision undermines the mandate of URBRA to set the levy for the entire Pension and retirement benefits sector.
He proposed that the provision should be rejected and amended to instead provide that NSSF shall pay a levy to the regulator.
However, Workers Representative Sam Lyomoki supports capping the levy while Rubanda East County MP, Henry Musasizi, who is also the Finance committee chairperson asked Lyomoki to propose an amendment to the URBRA Act to provide for capping the levy.
Lyomoki argues that capping the levy will reduce the amount NSSF pays annually to URBRA and that the levy should be for purposes of facilitating regulation and supervision.
On Tuesday when leaders of workers unions appeared before the joint committee, they proposed that the provision on levy should be deleted from the NSSF Bill.
The Minister of State for Sports, Charles Bakkabulindi, who attended the meeting, also proposed that URBRA Act should be amended with the aim of removing the provision for paying a levy.
Nsubuga explained that the authority relies heavily on monies collected from the levies imposed on the over 60 pension and retirement benefits schemes.
He adds that since 2013 when URBRA started its operations, government has been releasing a constant amount of shillings 6 billion and yet it currently requires shillings 13 billion, which will be addressed by collecting levy.
URBRA also proposes that the tax provision should be deleted from the Bill because it is unconstitutional to tax benefits.
The authority notes that taxing benefits at the point of payment for members below 60 years “shall disadvantage the member who contributes to NSSF”.
Nsubuga also explained further that the model that exempts contributions, investment income and taxing benefits, commonly referred to as EET, has been adopted on pensions or programmed withdrawals but not on lump-sum payments.
Nsubuga also told MPs to consider that NSSF should be under the Ministry of Finance because the Bill proposes that the Fund shall be run by guidance from the ministries of Gender and Finance.