The management of the National Social Security Fund (NSSF) has defended its performance track record, insisting that they have delivered value for the members, even amidst claims of mismanagement and running a high-cost operation.
Patrick Ayota, the Ag. Managing Director, last week told Members of the Parliamentary Select Committee investigating the Fund that merely looking at the Fund’s costs of operation without a comparative analysis of the value created as well as a peer review of similar funds in the region would only give an incomplete picture.
“In 2021/2022 our costs were UGX203 billion. In that time, the Fund grew from UGX15.6 trillion to UGX17.3 trillion, a growth of about UGX1.8 trillion. The UGX203 billion shillings generated a value of UGX1.8 trillion- that’s almost nine times. That means that for each shilling we spent in total costs, we generated 9 times more in value,” Ayota told the MPs.
Using staff costs as a base, Ayota also the Fund delivered 13 times more value for every shilling spent on their staff.
“Last year, the staff costs were UGX130 billion, which means that for each shilling we spent on a staff member, we generated 13 times the value,” he said, adding: “When you compare that with our neighbour (NSSF Kenya), in the same period, their total costs generated only five times value and their staff costs generated eight times value”.
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Ayota, also said that the Fund runs one of the most cost-efficient pension funds of its size.
“In terms of expense ratio, which measures the efficiency of the Fund, in 2017/18 it was 1.16%, 2018/19 it was 1.27%, in 2019/20 it was 1.91% and 2020/21 it was 1.06%. In 2021/22 it was 1.18%. In comparison for funds of our size, globally, out of the 320 pension funds that are of our size, the global benchmark is 2.2%. NSSF is running at about 1.18%,” he said.
He also defended the Fund’s investment strategy, saying that “the fact that the fund has grown consistently over the years proves that they have been higher performing assets than lower performing assets within the investment portfolio”.
Ayota, also told MPs, that due to consistent efficient performance, the Fund was well within achieving its 10-year strategic objectives, slated for 2024/25. He said that for example, the Fund had targets to reach UGX20 trillion by 2024/25 and was now at UGX18 trillion, well within its targeted objectives. The Fund is also on course to achieve its staff satisfaction and customer satisfaction objectives.