In Summary

According to NSSF’S post retirement report of 2018, 53 per cent of the beneficiaries said their benefits only sustained them for less than a year. By the end of the first year, 98 per cent had no cash left having spent it in most cases on non-cash return projects, Joanita Mbabazi explains.

Most people who save with the National Social Security Fund do not have an alternative saving scheme. If they are there, the numbers are minimal.
The biggest percentage do not have alternative saving schemes apart from NSSF. According to the chief executive officer of NSSF Richard Byarugaba, they found out that 90 percent of their savers did not have alternative sources of savings and it is the only money they have saved their entire life and hope it will cater for all their financial obligations in their retirement age.
Worse still, the decision to invest this money becomes a problem.
56 per cent, according to NSSF, rely on household information from relatives, friends and spouses. The challenge is they end up making decisions that are not informed on how best they can invest their savings.
Mr Byarugaba wonders why people only focus on the compulsory saving fund with them yet they deduct only 5 per cent from their salary. So, one wonders how they apportion the remaining salary.
“It does not matter what you earn, but what you invest your money on. You can utilise your salary before getting your saved money with NSSF after retirement. There are alternative saving schemes such as opening a fixed deposit account to save part of your salary and save with NSSF at the same time. When you reach your retirement age you have enough’’, says Byarugaba.
“NSSF savings are supposed to meet an ongoing activity not to start up one or solve your financial problems. It hurts but people have to face the reality,” Mr Byarugaba explained.
On a daily basis, “People write to me in need of this money to solve their current problems, I find it hard to help till when one is the age of 50 according to the NSSF Act is when they can have access to their money”, says Byarugaba.
“The financial challenges that people encounter are not the intended reason for the savings,” says Mr Byarugaba. This money is expected to assist the saver in their retirement age depending on how they invest it.
According to NSSF’S post retirement report of 2018, 53 per cent of the beneficiaries said their benefits only sustained them for less than a year. By the end of the first year, 98 per cent had no cash left having spent it in most cases on non-cash return projects.

How people use savings
According to NSSF, almost 45 per cent spend their benefits on building and improving their homes”, says Byarugaba.
Sometimes beneficiaries become victims of fraud from land transaction. Their construction materials on site when not monitored carefully drag them into losses and by the time they realise, all their savings are gone and the once working person starts to live a miserable life. Indeed, some beneficiaries are struggling financially.
On a monthly basis, NSSF approximately pays off Shs44 billion to savers because this is their money. But it is unfortunate that the money is not invested in businesses that bring returns. Instead, it is all wasted.
“This is so because they did not invest their savings wisely and did not seek financial literacy on how they can invest their money,” adds Mr Byarugaba.

Investing savings
According to NSSF, almost 45 per cent spend their benefits on building and improving their homes.
Sometimes beneficiaries become victims of fraud from land transactions, their construction materials on site when not monitored carefully drag them into losses. “By the time they realise, all their savings are gone and the once working person starts living a miserable life. Such beneficiaries end up struggling financially,” explains Mr Byarugaba.
On a monthly basis, NSSF approximately pays off Shs44 billion shillings to savers because this is their money. But the money is not invested in businesses that bring returns. Instead, it is all wasted.
“This is so because they did not invest their savings wisely and did not seek financial literacy on how they can invest their money, adds Mr Byarugaba.
Venturing in business that brings financial returns from one’s salary could be another option when you receive your savings. The savings just add up capital to a ventured business before this could farming, tree planting among others, explains Byarugaba.

What savers should do
Savers can invest their savings in bonds, equities and also real estate. But this needs to be closely monitored to bring back gainful returns.
“It’s wise to look at returns when investing because this is the only way you will keep financial flow in since after retirement you will not have a job”, says Mr Byarugaba.