THE National Social Security Fund (NSSF) has been able to record a steady growth over the years. Recent data show that the size of the accumulated total value of the Fund as at June 30, 2014 had reached Tsh2.759 trillion, up from Tsh2.551 trillion a year earlier to the day.
This relatively healthy growth of 8.17 per cent was the result of increases in both contributions and investment income. The Fund's collection of contributions increased to Tsh548 billion in the 2013/14 financial year – a 15.20 per cent rise over the previous year's collection, the Director of Finance, Ludovick Mrosso, says in a report released during the Fund's annual general meeting which was held at the AICC in Arusha on June 2-4 this year.
Mrosso also told the meeting – which brought together more than 1,000 Fund members and other stakeholders from within and outside the country – that NSSF boasted a membership size of 53,866 from the informal sector of the Economy in 2013/14.
This reflects a growth of 51 per cent in membership, up from the 35,596 members on record in 2012/13! The Fund's Finance Director also said that NSSF paid out benefits to its eligible members totalling Tsh344.7 billion in 2013/14.
This favourably compares with the Tsh228 billion paid out in 2012/13: an increase of 51 per cent in a single year! By way of explanation, Mrosso said that this relatively huge increase in the benefits payments was the result of the Fund's efforts to realise its commitment to its members.
In that regard, significant payments during the period under review related to withdrawal benefits, which accounted for 82 per cent of all the payments made out during the year. However, investment income during the year under review decreased from Tsh252 billion in 2012/13 to Tsh222 billion in 2013/14.
This 12 per cent drop was largely due to a decrease in income from interest on loans which accounted for 91 per cent of all income received! NSSF's major sources of income from investments include interest on loans; dividend income; rental income from residential and commercial buildings; profits from associate companies, and gains accruing from reselling acquired plots of land.
Other sources of income are in the forms of foreign currency exchange dealings; gains on selling equity shares; gains on disposal of assets, and 'other' receipts from time to time, Mrosso, revealed – expounding that these 'other' incomes amounted to Tsh9.7 billion in 2013/14, compared to the Tsh15.6 billion earned in 2012/13: a decrease of 38 per cent.
Explaining this drop, the Finance Director said that it was basically due to the absence of income from reversal of provisions – which was the case during 2012/13 – and missing of opportunities on interest earnings from current accounts, as well as a decrease in the penalties which are routinely charged on delayed contributions by members.
If nothing else, this last reason is testimony to the fact that compliance by the Fund's members continued to strengthen! Administrative and other expenditures amounted to Tsh260 billion in FY-2013/14 – compared to Tsh151 billion in 2012/13.
This 72 per cent increase was largely the result of an increase in the provision for impairment of financial assets by 297 per cent, compared to previous year! Mrosso elaborated that, during the period under review, NSSF had sufficient assets to cover all its short-term and long-term obligations.
As it is, the Fund recorded Tsh2,582.9 billion-worth in net assets available for benefits, compared to the 2012/13 available assets of Tsh2,378 billion.
“This increase was due to an increase in assets – and a decrease in liabilities – as a result of enhanced Treasury and other investment decisions,” Mrosso explained.
All in all, total investment assets increased by Tsh108.3 billion in FY-2013/14 compared to the previous year. The increase was contributed to by assets forming the Fund’s investment portfolio.
“A major increase has been in investments in joint operations between the Fund and Azimio Estates Holdings, through the Hifadhi Builders Company Limited to construct satellite estates in Dege Eco Village in Kigamboni (Dar es Salaam Region), a project which is expected to be completed in 2017.
“Also, significant increases have been on investment in quoted, unquoted, joint operations and investment in properties which have increased by 21, 45, and 18 per cent respectively,” the Fund's 2013/14 Annual Report reads in part.
The Report also reveals that the Fund's Board of Trustees confirmed that “applicable accounting standards have been followed; and that the financial statements have been prepared on a 'going concern' basis.
The Board of Trustees has reasonable expectation that the Fund has adequate resources to continue in operational existence for the foreseeable future. The National Social Security Fund (NSSF) is a compulsory scheme providing a wider range of benefits which are based on internationally accepted standards.
It is one of the leading Pension Fund Schemes in Tanzania – and is the fastest-growing in terms of membership base, contributions collection, prudent investment and a huge step in Information and Communications Technology (ICT) application.
The Fund was established by an Act of Parliament (No.28 of 1997) to replace the defunct National Provident Fund (NPF).