Uganda: Government Moots New Law to Tax NSSF Savings

Government yesterday tabled the National Social Security Fund (Amendment) Bill, 2021, resurrecting in it a proposal on mid-term access for eligible savers to 20 percent of their money.

It is provided that an NSSF member aged 40 and above, and who has saved for at least a decade, is eligible to mid-term access of up to 20 percent of their benefits.

This provision was originally contained in the enacted NSSF (Amendment) Bill, 2019 that President Museveni was yet to sign into law before Speaker Jacob Oulanyah terminated the Act, alongside 11 other Bills, on technical grounds.

Whereas the restoration of mid-term access would be good music to eligible savers, a proposal in the new Bill to tax the Fund’s pay-out to members, contrary to the current arrangement where a saver picks all their savings untouched, risked sparking uproar.

Mr Dominic Gidudu, the State minister for the Elderly, tabled the Bill in whose preamble it is noted that the Uganda Retirement Benefits Regulatory Authority (URBRA) Act, 2011 provides for taxation of contributions and income of scheme — such as NSSF — “which does not promote the culture of domestic long-term savings that is critical for sustained economic transformation.”

In the new Bill, the government instead seeks to amend the National Social Security Fund Act, Cap 222, “to provide for the deference of taxes on contributions and scheme income to the time of payment of benefits.”

This means that accruals on Fund members’ accounts through monthly remittances and interest will not interest the taxman, as required by the sector regulator, but the heftier final benefit pay-out will be targeted.

Gender Minister Betty Amongi, who under the current law co-superintends over NSSF with the Finance Minister, was unavailable last night to respond other our inquiries about the proposal.

Another proposal, which the National Organisation of Trade Unions chairman general Usher Wilson Owere rejected outright, is to place the Fund under exclusive political supervision of the Ministry of Finance.

The Milton Obote government established NSSF in 1985 as a provident fund for private sector workers and is currently worth Shs13.7 trillion, making it an elephant in the Ugandan financial market.

It was domiciled in the Gender, Labour & Social Development Ministry — which superintends labour rights and welfare issues — but the government in 2007 moved shifted in under Finance amid allegations of corruption and lack of expertise to manage the fund then growing by leaps and bounds.

However, bureaucrats later reached a middle ground to have both Labour and Finance ministries exercise supervision over the Fund.

It is this arrangement that the proposal in the new Bill seeks to dismantle, a change Mr Owere opposes.

“If you are saying [that] the management of the Fund should go to Finance [ministry alone], then transfer the workers [from Ministry of Labour] to Finance. But if the workers are still at Ministry of Labour, let the money be controlled by Finance and Gender ministries,” he said by telephone.

He said if his proposal on behalf of workers is not agreeable, then President Museveni should consider establishing a stand-alone Social Security ministry to manage NSSF.

Finance Minister Matia Kasaija declined to speak on the matter when contacted last night.

The proposed alterations were not in the enacted National Social Security Fund (Amendment) Act, 2019, which was discarded following Parliament Speaker Jacob Oulanyah’s September 16 ruling.

Citing Rule 235 of Parliament’s Rules of Procedure, Mr Oulanyah, to the consternation and chagrin of workers, ruled on September that any Bill pending processing, or an Act of Parliament awaiting presidential assent, would require to be tabled afresh as they constitute the unfinished business of the 10th Parliament dissolved in May.

The decision, which triggered a litany of high-level engagements, terminated 12 Bills, among them The Sexual Offences Bill, The Succession Bill, Landlord and Tenant Bill 2019, Marriage and Divorce Bill 2015 and the National Health Insurance Bill, in addition to the NSSF (Amendment) Act, 2019.

Members of Parliament representing workers, alongside workers’ union executives, held crisis meetings with Speaker Oulanyah and other stakeholders, demanding restoration of the Act, which required only pre-agreed specific amendments to get President Museveni’s signature on it.

Stakeholders agreed on the amendments during a meeting with the President on August 4 and Mr Museveni was due to return the Act for reconsideration and rewording by the 11th Parliament at the time Mr Oulanyah permanent applied brakes on all works pending from the predecessor House.

Nonetheless, many provisions in the terminated Act have been integrated in the new one. For instance, the NSSF (Amendment) Bill, 2021 proposes to introduce mandatory contribution by all workers, regardless of the size of the enterprise.

Under the present law, only firms employing 5 or more workers could remit contributions to the Fund.

Following tabling of the Bill, Speaker Oulanyah, in response yesterday directed Parliament’s Committee on Gender to only consider effecting the changes that were advised by President Museveni in the August 4 meeting.

He directed that the Bill be expedited and tasked the committee effect the changes and to report back to the House within 10 days.

“This is an urgent Bill and you need to look at those particular areas, don’t look at the whole Bill,” he said.

The re-tabling of the Bill followed last month’s letter by President Museveni to the Speaker. In the August 26 letter, President Museveni returned the NSSF Bill 2019(Amended) for amendment of Section 24, which provided for midterm access for different categories of savers.

“Allowing midterm access for all members who are 45 years and above or those who have saved 10 years increases the total number of the members eligible to access midterm, which will be unsustainable for the fund,” the Speaker said, quoting the letter.

In a related development, the government yesterday tabled six Bills before Parliament, including The Landlord and Tenant Bill, 2021, Supplementary Bill, 2021, the Fisheries and Aquaculture Bill, 2021, and the Physical Planners Registration Bill, 2021.


Other proposed changes

– A member who has made voluntary contributions to NSSF shall be allowed mid-term access to his or her benefits accrued from the voluntary saving on such terms and conditions and in a manner prescribed by the board.

– A member of the fund who emigrates permanently from Uganda to a country with which no reciprocal arrangement under this Act has been made, where contributions under this Act have been paid in respect of that member to the Fund, the member shall be entitled to the full balance of his or her account in the Fund.

– An employer who deducts a voluntary contribution and fails to remit the contribution to the fund commits an offence and is liable, on conviction, to a fine not exceeding one thousand currency points (Shs20m) or imprisonment not exceeding three years or both.


Source link :

Author : Monitor

Publish date : 2021-10-01 13:51:17

share on: