This is your NSSF. Vision. Mission. Tagline

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1 This is your NSSF Vision To be the Social Security Provider of choice Mission To secure a better life for our growing membership by; Providing Quality Products; Great Customer Service; and Offering Competitive Returns in a Transparent and Efficient Environment. Tagline I N N O V A T I O N I N T E G R I T Y T E A M W O R K E F F I C I E N C Y A better future C U S T O M E R - C E N T R I C Vision: To be the Social Security Provider of Choice Mission: Quality Products. Great Customer Service. Competitive Returns. Values: Customer Centric. Innovation. Integrity. Teamwork. Efficiency

2 Agenda Business Model NSSF Today Assets Investments Return Benefits Payments Channels NSSF in the new regulatory environment Conclusion Q & A

3 NSSF BUSINESS MODEL Real Estate Equities Fixed income Investment Portfolio Members NSSF Part of earnings used for Overhead You qualify for the benefits when you: Reach age 55 (Age benefit) Reach 50 years and are unemployed for at least 1 year (Withdrawal benefit) Are sick and unable to work (Invalidity benefit) Die, in which case the benefits are paid to your next of kin (survivors benefit) Move to exempted employment e.g. Government (Exempted employment) Permanently move out of Uganda (Emigration grant).

4 NSSF Today: A provident Fund created by the NSSF Act of December 1, 1985 IMPACT OF NSSF ON UGANDA S ECONOMY UGX 4.9 Trillion in member funds. 570,000 members. Total assets UGX 4.9 Trillion. Equivalent to 5.6% of GDP. Holds 16% of USE traded securities. Invested UGX. 3.0 Trillion in government securities. 40% of Govt Debt. Placed UGX. 661 Bn as Fixed deposits with local banks: 14% of all Bank deposits. UGX 444 Bn in Real estate investment properties. NSSF plays a significant role in Uganda s economy. This role can be bigger!

5 Changes in the Fund The last four years have seen the fund grow in all dimensions The engine of growth has been: Relationship Management improved compliance, Prudent aggressiveness investment led to higher revenues Efficiencies led to better cost management Robust Customer relationship led to higher satisfaction

6 Phenomenal Growth In the Asset Base UGX Billions UGX Billions Powered by the Relationship model of management compliance improved from 52% in 2010, to 73% in 2013 to 77% in 2014 leading to improved contribution 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 52% 67% Compliance % 73% 73% 77% % The Fund grew by over 150% over the last five years. Fund size doubled. The Fund is fully funded. Assets are more than adequate to cover member liabilities. The Fund has no significant external liabilities. Members claim against the Ugx 4.67 trillion asset base stands at 98%. The Fund is now the largest financial institution in Uganda Assets and Contributions Growth Contributions grew year on year average of 23%. Annual total contribution more than doubled from Ugx 295 bn in 2010, to , to UGX 638 bn in Contributions received (UGX. Bn) 112% FY 09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14 Years Monthly Contribution Total Assets These funds are invested in different asset classes: Fixed income securities, Equity and Real Estate.

7 NSSF Investments as of June (Amts in Ugx Bn) Fixed Income Portfolio- 81% (UGX. 3.4Tr) Equities Portfolio- 9% (UGX 394Bn) 2,500 2,000 1,921 2,361 1,500 1, Fixed Deposit Corporate Bonds Mortgage Corporate Finance Loans Jun-13 Jun 14 Infrastr Bond Treasury Bonds Real Estate Portfolio- 10% (UGX 444Bn) NSSF is in a very liquid financial position. Most of the assets can be liquidated within one year. Approximately 6% (Ugx 268 bn) of total assets have been invested outside Uganda, primarily in Kenya. The legible investment opportunities within the country are not enough to absorb NSSF investment potential. What is needed are strategic domestic long term investments that can absorb this huge local savings pool.

8 Investments Returns & Revenues NSSF has adopted an investment posture that is both aggressive and yet prudent. There is zero tolerance for idle cash! Despite the economic turbulent years that specially depressed equity returns, NSSF investment portfolio mix has yielded returns that are, over the five year period, better than the 5 year Treasury Bonds. This better than average returns led to increased revenues. Over the 5 years, total income grew by 261%! Annual income grew from UGX 160 bn in 2010, to UGX 490 bn in 2013 to UGX 552 bn in Fixed income securities returns averaged 14%, Equities returns averaged 13%, and Real Estate returns averaged 6.5%. This level of Revenue enabled the Fund to not cover its overhead but also provide members with double digit returns. Rate of Return compared to 5 yr Treasury Bonds Growth of Total Income -(blns) 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 13.9% 10.0% 14.7% 15.1% 13.8% 8.6% 15.8% 14.8% 14.2% 13.90% % % % 2.0% % Rate Treasury Bonds

9 Managing Costs % of cost to income 100% 90% 80% 70% 60% 79% Cost Income Ratio 71% 68% 72% 76% NSSF grew both assets and revenue WITHOUT a significant increase in the costs. Cost income ratio, which measures the value that is derived (revenue generated) from each shilling spent on operations, shows that NSSF is squeezing additional value from each shilling spent. Over the years, NSSF has managed its costs to an enviable 13% Cost Income ratio (on total income basis). This was from a high of 98% in % 40% 30% 20% 35% 38% 19% 17% 13% This is significantly better than the banking industry, where the cost to income ratio is not only higher but has been rising over the last three years. The efficiency in managing of costs contributed to additional value to members. 10% 0% NSSF CIR Industry CIR NSSF is more efficient than the financial services sector!

10 Efficiency adding more value to members Revenue, Cost & Interest to Members Trends Revenue, Costs & Interest to Members In the midst of tough economic times, aggressive but prudent investment strategy led to revenue growth of more 200%. Efficiencies and cost management strategies led to higher productivity. Growth in revenues were not matched with increased costs Underlying Income Interest Costs The result is that members received more value, as more and more of the income was credited back to members. In 2014, UGX 365 bn was credited to members, up from UGX 281 bn in Cost income ratio is at 13%, better than 76% of the banking industry average. Cost of administration is at 1.5% better than most global funds of similar sizes.

11 Interest credited to members 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% Comparison between NSSF interest rates & 10-year inflation rates 7.00% 6.53% 6.00% 6.72% 10.00% 9.23% 11.23% 9.00% 11.50% 9.23% In 2012, and in order to preserve and grow member value, NSSF made a systematic and deliberate decision to offer members with a minimum of 2% above 10 year inflation. This has become one of the main strategic objectives of the Fund and all Fund efforts and activities were then geared on the delivery of this objective. Even though this plan was to achieve this target in the year, this target was actually achieved in year, and was met again in the year. 0.00% Jun-10 Jun-11 Jun-12 Jun-13 Jun Year Avg Inflation NSSF Interest Interest to members above 10 year inflation rate, 2014 rate of 6.5%! NSSF preserves value.

12 Surplus: 200 Cumulative Surplus (Deficit) Amt (bn) 170 Increased revenue and also costs management, has enabled the Fund to turn the deficit that was inherited in 2010 to a health surplus of UGX 170 billion by This surplus has placed the Fund in a strong financial position with the ability to withstand at least 2 years of shocks without a significant financial impact to the members A strong foundation has been laid to weather future shocks

13 Efficiency leading to better Benefit Payments Benefits Payments in UGX. BN FY 07/08FY 08/09FY 09/10FY 10/11FY 11/12FY 12/13FY 13/14 Benefits Payout in UGX. Billions 12% 35% 14% 9% 3% 28% Age Benefit Withdrawal Benefit Survivor's Benefit Invalidity Benefit Emigration Grant Benefit Exempted Employment Benefits paid increased from 140 bn in 2013 to 165Bnin Benefit Payment Turnaround Times (Days) Number of beneficiaries paid, up by 22% to 11,000 in Only 3% paid to survivors. 97% paid to living members Benefit turnaround time improves to 10 days from a high of 105 days / / / /13 NSSF is paying more within a very short time.

14 More access points for members In addition to the 20 dedicated branches country wide with associated 51 outreach centre's, the fund, over the five years, introduced additional Interactive electronic service delivery channels that enable you track your savings anytime, anywhere; Instant Statement NSSF Uganda Over 43,000 use these channels on a monthly basis.

15 The accolades NSSF is leading the pack and others have noticed: In the top 10 of best 100 East Africa Countries on Go Runner up on Financial Reporting Public Sector Best Public Corporation web site (2014)

16 The accolades

17 Staff are more engaged to serve customers: Approximately 800 man hours donated for CSR activities. 77% 94% of staff effort is aligned to strategy of the Fund. Staff satisfaction up from 65% to 77%. 65%

18 The effort is paying off: our members are happier During my recent visit to Uganda, the service experience I received from providers in various industries was consistently frustrating. Probably because I have spent my entire career working at ensuring customer satisfaction, each disappointing experience in a bank, telecom or restaurant was very devastating. Customer Satisfaction has risen % Just before I left Uganda with a very heavy heart, I had the opportunity to receive service at NSSF! I was greeted by a warm smile from the person at the door and given assurance that one of the officers will attend to me in about 5 minutes. It was great to see someone setting expectations for a change! About a couple minutes later, I was ushered to the desk of a pleasant young man, I later learned was called Samson Osuwat. He helped calm down my anxiety (I was angry and time barred following what I considered a waste of time at a bank where after a long wait, I had again not received the service I sought). He expressed empathy for my frustration and urgency given that I had to be in several places before my departure from Uganda very early the following day. He then eloquently advised me about the process, again setting clear expectations and advised me about how to track my application online once I left the country. For the next few weeks of processing my request, my wait could not have been more tranquil, and indeed I received the funds within the time frame he had promised. This was surely one of the best service experiences I have ever received! Your team and specifically Samson is a model of what customer service should be. I would like to commend you and your leadership team for the great job you are doing. 49% 2010 Reason Given Access to information Good customer Service Reasonable Returns Very short TAT. Regards, Allan Mulondo 18

19 Preparing for the new regulatory environment The Change Requirements of a Retirement Benefits Scheme Progress for NSSF 1. Establishment of the Uganda Retirement Benefits Authority- A regulator for the retirement benefit sector to ensure sound governance of members savings Apply for a operating license by 31 st Dec Appoint a Trustee, Custodian, Administrator and Fund Manager Draft an Investment policy in line with the provisions of the Act. NSSF has received a provisional license. Appointment of Trustees, Custodians, & Fund Managers is in progress. Draft policy in place. To harmonize with regulations once released. 2. The Proposed Liberalization Bill, 2011 seeks to liberalize the Pensions Sector NSSF will cease to be a monopoly. Opens sector to other players. Convert from a Provident Fund to a Pension Fund Obtain a minimum capital threshold Lower the minimum age to 45 Widen the scope of Benefits to include Home Ownership, Education, Health & Maternity and Unemployment Changing the organization culture to become a customer centric and efficient organization. Advocating the government to give current members the option to choose between lump sum and annuities. Developing new products for its members. Your NSSF is prepared for the new regulatory and competitive environment

20 Looking towards the Future: Key Strategic Targets People & Systems Business Process Customers Financials Return to members interest of 10 yr inflation +2% Additional products & Services to members Grow Net Return on Assets to 13.4% Manage costs to Expense ratio of 1.4% Improve Benefit Turnaround time to 5 days Maintain Satisfactory compliance & audit ratings Improve staff satisfaction to 90% Automate 90% of core business process

21 In conclusion The Fund is in a much stronger position than at any time in its history. NSSF Commitment; Prudent investments to preserve the value of your savings; Reasonable rate of return on your investment Easy Accessibility to your savings; Transparency in all dealings; Value adding benefits; For A better future