NSSF launches Voluntary Savings - Smartlife Flexi.
November 20, 2024
Friends,
The National Social Security Fund (NSSF) Uganda has introduced a voluntary savings product named Smartlife Flexi to increase social security coverage, targeting existing NSSF members, non-NSSF members in the formal sector, the informal sector, and the diaspora.
For too long, one of the biggest challenges the savers of NSSF have faced has been the liquidity (ability to access their investments when the need arises) and the ease with which they can withdraw their savings, especially in terms of emergencies.
With this new product, a person can withdraw their money with minimal withdrawal cost after one year (Lock in Period is 1 year), but they can also save for as long as possible.
What this product is going to do is allow an investor to take advantage of the systematic products of NSSF and it’s reputation and the returns they offer to their investors, while at the same time providing a solution to the liquidity challenge that has always eluded this pension product. You will benefit from the good returns they are offering, like the 11.5% they offered last year, while knowing that you can invest for as little as one year or as long as 20-50 years. When you need your money, you can withdraw some of it, which brings in a very good money market fund.
Another benefit of this product, similar to a true money market fund, is that you can invest as little as UGX 5,000, and your interest is calculated daily and credited to your account monthly. This means that your money earns interest every single day and it compounds monthly.
You can deposit daily, weekly, or monthly, and you will see your money grow consistently. This flexibility is beneficial even for people in the most informal sectors who are earning as little as UGX 200,000.
They can invest UGX10,000 daily or UGX 10,000 weekly, allowing them to earn from their savings while knowing they have a Pension Protection benefit for the future. Additionally, they can withdraw their money whenever they need to.
The new product, named NSSF Smartlife Flexi, follows the publication of the National Social Security Fund (Voluntary Contributions and Benefits) Regulations, 2024, by the Minister of Gender, Labour and Social Development Hon Betty Amongi, on November 8, 2024.
Unveiling the product at a media event in Kampala today, NSSF Managing Director Patrick Ayota said that the NSSF Voluntary Savings Plan is borne out of the Amendments to the NSSF Act that now empowers the Board to develop and introduce new products and benefits and is informed by research conducted by the Fund.
“In 2021, we conducted the NSSF Members Needs Research as we prepared to develop new products. 60% of our members told us that they were not saving enough and wanted more voluntary options. The research also affirmed that members need more products that address their Retirement Fund needs like education, health, and capital accumulation to start a business or seed acquisition,” he said.
“The NSSF Smartlife voluntary savings plan addresses these member needs and is flexible enough to enable a saver to choose mid to long-term savings goals but also offers an opportunity for optional affordable offerings,” Ayota added. Ayota emphasized that any person can make voluntary contributions, and mandatory members can also make voluntary contributions as top-ups.
“In developing this savings product, we considered flexibility, affordability, and choice for the saver. For instance, the minimum amount per voluntary contribution is UGX 5,000 and the member selects the frequency of contributions for a particular purpose over the preferred period. The return is computed on a daily balance but credited every month. Although the minimum lock-in period is 1 year, early exit is permitted with minimal withdrawal costs,” Ayota said.
Ayota further explained that the introduction of Smartlife Flexi is part of the Fund’s strategy to increase social security coverage to at least 50% of Uganda’s working population by 2035, with a special focus on targeting underserved workers.
The NSSF Smartlife Voluntary Savings Product is open to all Ugandans aged 16 and above, both within Uganda and abroad, provided they have a National Identification Number. Non-Ugandans living and working in Uganda with a valid passport, as well as refugees in Uganda with valid identification, are also eligible.
The savings product enables income earners to save for defined periods and defined goals of their choice. It is designed on a voluntary principle that empowers a saver to choose how much to save, when to save, and for how long. Enrolled members can save for goals of a minimum of one year.
Reiterating the flexibility of Smartlife Flexi, Dr. David Ogong, the NSSF Board Chairman expressed his gratitude to the Government for granting NSSF the opportunity to develop innovative products that provide Ugandans with greater convenience and flexibility in saving.
He encouraged members to embrace Smartlife Flexi for a competitive return, emphasizing NSSF's proven track record in safeguarding and securely investing
members' savings. Mr. Thadeus Musoke, Chairman of the Kampala City Traders Association, commended NSSF for its innovation, highlighting that the Smartlife Flexi savings product empowers workers with more control over their finances.
“I am confident that through our partnership with NSSF, we will champion this innovation to bring value to the trading community. Smartlife Flexi will help traders build capital through consistent saving and avoid expensive credit,” he noted.
Thank you for the article. Many of us save with NSSF only because it is a statutory requirement. I am not sure I see any benefit of signing up for their shiny new Smartlife product when the same product exists on the market through several existing collective investments schemes with similar (even better?) interest returns. And NSSF's 1 year lock period is actually a disincentive not a plus.
In short, I am not seeing a compelling value proposition.
Man you're taking this thing to the next level brother. Thank you so much