National Social Security Fund (NSSF) is seeking to recover over Shs 160bn following announcement of a grace period of 3 months for all employers that have not remitted employees’ social security contributions to agree a payment plan.
In exchange, the Fund will waive up to 95% of the penalty amount owed, NSSF Managing Director Richard Byarugaba has said.
Atleast 10,839 out of more than 33,270 employers registered with the Fund have not paid NSSF contributions in a period ranging from 2 months up to 7 years thereby denying their employees social security protection.
Byarugaba said that although it is the obligation of every employer to pay social security contributions for their employees on a timely basis and the correct amounts, the Fund recognises that for various reasons, some employers may be unable to remit funds on a regular basis.
Eventually, they get overwhelmed by the arrears and penalties levied on unremitted funds.
“Therefore for the next 90 days, we have declared an Amnesty for all defaulting employers to allow them negotiate payment plans with the Fund. In turn, I will waive up to 95% of the penalty the defaulting employer is supposed to pay. This is on condition that such an employer comes forward, commits to clear all the arrears owed in a period to be agreed by signing a Deed of Settlement,” Byarugaba said.
Section 14 (2) of the NSSF Act empowers the Managing Director to waive “whole or part of any penalty subject to such conditions as he or she may determine.”
He added that using a similar approach, the Fund has already recovered about Shs 13.7bn since July 2017 from 380 employers who came forward and signed Deeds of Settlement.
Byarugaba said that employers that do not take advantage of the Amnesty window risk court action to recover the arrears, the penalty and interest accrued.
“Litigation is our last resort. We prefer to have discussions with employers as per our Relationship Management business model, because we understand that sometimes, businesses face challenges with their cash flows. However, employers that not only categorically default but are also unwilling to agree payment plans with the Fund will be taken to court,” he said.
Information available from the Fund indicates that 174 employers have been arraigned before courts of law and over Shs 17.8bn has been recovered in the process.
Byarugaba added that beyond paying for their employees’ social security, employers should know that remitting NSSF is good for their business.
“Companies that do business with the government, many other government agencies and even in the private sector are required to present clearance certificates confirming that they are NSSF compliant. We also know that employers who pay social security contributions easily attract and retain the best employees. It is therefore a good business decision for employers to pay NSSF contributions,” he said.
As at end of December 2018, the Fund was worth Shs 10.2 trillion up from Shs 8.7 trillion in December 2017. Monthly average contributions are now at over Shs 96bn.