By Mitchelle Mugyeni
A few weeks ago, NSSF gave Ugandan savers good news. The Fund declared an interest rate of 22.53 percent for the year ended June 2026. That is the highest rate in its history and a big jump from 13.5 percent last year. Total income almost doubled, from Shs3.5 trillion to Shs6.51 trillion.
Many clients now ask me the same thing. If NSSF is paying this well, do I still need a unit trust? My answer is yes, because the two do different jobs.
How a pension fund works
NSSF is a long-term savings plan. Every month you save 5 percent of your salary and your employer adds 10 percent. The Fund invests the money mostly in government bonds, with some in equities and real estate. At the end of each year, it pays you interest on your balance from what it earned.
The strength of NSSF is discipline. Your money is locked, so you cannot spend it on impulse. The weakness is access. You mainly get your money at retirement. Members aged 45 who have saved for at least 10 years can take 20 percent early as midterm access.
Here is an example. If you had Shs10 million on your NSSF account on 1st July 2025, you will earn about Shs2.25 million in interest this year.
How a unit trust works
A unit trust pools money from many people. A professional manager then invests it in bonds, bank deposits and sometimes shares. The Capital Markets Authority licenses and supervises all unit trusts in Uganda.
Old Mutual Investment Group is a good example. In 2025 its Umbrella Fund returned 12.56 percent, its Balanced Fund 13.62 percent and its Dollar Fund 5.15 percent. You can start with as little as Shs100,000. There are no entry fees, interest is worked out daily, and you get one free withdrawal each month.
Here is an example. A trader puts Shs500,000 into a unit trust every month. When school fees are due or a business deal comes up, she withdraws part of it without waiting for retirement.
The key differences
NSSF is for your old age. A unit trust is for your goals before then. NSSF is compulsory for most employees, but a unit trust is your own choice. NSSF money is locked, while unit trust money reaches you within days. NSSF declares its rate once a year. Unit trust returns move with the market and are not guaranteed. This year’s 22.53 percent is excellent, but past returns do not promise future ones.
My advice
Keep your NSSF savings growing for your retirement. Then build a unit trust fund as an emergency fund & alternative investment for your passive income. One protects your future. The other protects your present.
The writer is a finance, investment, and insurance Advisor