Home NationalLaw and Order Top government ministers bitterly clash over workers savings

Top government ministers bitterly clash over workers savings

by Odongo Christopher

The Gender, Labour and Social Development Minister, Janat Mukwaya on Wednesday clashed with the State Minister for Finance Gabriel Ajedra over several provisions in the proposed National Social Security Fund (NSSF) Bill 2019.

The two top ministers were appearing before the joint parliamentary committee handling the NSSF Bill expressed conflicting views.

Key changes to the current law is that the NSSF Bill seeks to among others make it mandatory for all workers to register and contribute to NSSF, allow self-employed people to contribute to NSSF, midterm access to benefits for only voluntary members and that the NSSF board shall have a role in the appointment of the Managing Director.

Ajedra told the legislators that the Finance Ministry has several reservations in some provisions, arguing that even during Cabinet “this has not been an easy Bill.” He noted that the sale of treasury bill and bonds is dominated by NSSF because of the monopoly it was given in the social security sub sector.

Ajedra said that the management of these resources has partly limited the development of the capital markets in the economy, mooting several reasons for the liberalization of the sector before the committee.

However, Mukwaya said that much as Economists like Ajedra and ministry of finance have the mandate to determine the NSSF investment plan, there is need to ensure that functions in line with the International Labour Organisation that was key in the establishment of the fund.

“What my colleague is suggesting was tried elsewhere and wherever it was, it collapsed,” She said.

Other controversies

Other sticky controversial provisions include the proposed expansion of the of NSSF coverage through mandatory contribution from all firms that have employees, not a minimum of five workers as provided in the 1985 NSSF Act, and the proposal to tax benefits of savers who withdraw before attaining the age of 60 years.

Mukwaya explained that the tax exemption provision caters for employer’s contributions and employee’s contributions below 30% of their income and investment income of NSSF. She noted that members benefits shall be taxed only during payment at 55 years while those who get paid at 60 years and above will not pay taxes on any benefit.

“This proposal was informed by analysis that workers would earn more benefits,” she explained. She said that the tax exemption provision will improve the effectiveness of benefits by encouraging additional retirement savings from the informal and formal sector by deferring taxation on contributions made and scheme income derived after the enactment of the Bill.

However, Pian Country MP Remigio Achia tasked the Mukwaya to explain why the Government seeks to exempt only NSSF from paying income tax on investments without extending the same to other players in the pension sector.

In response, Mukwaya said she was only responsible for the NSSF. The Pension Liberalisation Bill by technocrats from the ministry of Finance hit a dead end at parliament after stakeholders from workers’ unions, gender ministry and public service officials opposed the move.

Gender Committee chairperson, Alex Ndeezi wondered why the ministers have failed to harmonize the government’s position on the matter. MPs also wondered why the Bill has not provided for mid-term access, something that many workers have been advocating for.

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