Uganda's National Social Security Fund (NSSF) declared an interest rate of 22.53% for the financial year ended 30 June 2026, the highest rate declared in the Fund's history.
The declaration translates into approximately UGX 5.44 trillion being credited to members' accounts. It is an extraordinary result and substantially exceeds the 13.5% rate declared for the previous financial year.
However, the record return has generated an important debate about the composition of NSSF's income. Some commentators have questioned whether the Fund effectively distributed "paper profits", particularly unrealised gains arising from movements in investment values and foreign exchange rates.
The published figures show that this is a legitimate question. But describing the result simply as "creative accounting" risks confusing two very different issues: recognising an unrealised gain and using that gain to determine interest credited to members.
NSSF genuinely had an exceptional year
The controversy over unrealised gains should not obscure the strength of NSSF's underlying performance.
According to the Fund's FY2025/26 reporting, total income increased to approximately UGX 6.51 trillion, compared with approximately UGX 3.52 trillion in the previous year.
More importantly, realised or core income increased by approximately 24%, from about UGX 3.13 trillion to UGX 3.88 trillion.
Interest income amounted to approximately UGX 3.50 trillion, dividend income increased to approximately UGX 369 billion, while real-estate income contributed approximately UGX 16 billion.
Member contributions increased to approximately UGX 2.42 trillion, while benefits paid during the year amounted to approximately UGX 1.55 trillion.
The Fund grew from UGX 26 trillion to nearly UGX 33 trillion
NSSF's total asset base increased substantially during the year, rising from approximately UGX 26.01 trillion to UGX 32.87 trillion.
NSSF Total Assets
UGX trillion
Asset growth: approximately 26%
The increase reflects new member contributions, investment income and substantial appreciation in parts of NSSF's investment portfolio.
NSSF reported particularly strong performance from its regional equity investments. Its equity portfolio increased from approximately UGX 3.4 trillion to UGX 5.9 trillion, reflecting both additional investment and significant capital appreciation.
Investments cited by the Fund as important contributors included CRDB, MTN Uganda, Airtel Uganda, NMB and KCB.
The UGX 2.62 trillion that changes the story
NSSF reported approximately UGX 6.506 trillion of total income. But that income was composed of two fundamentally different categories:
- UGX 3.883 trillion of realised/core income;
- UGX 2.623 trillion of unrealised gains.
Composition of NSSF FY2025/26 Income
Total reported income: UGX 6.506 trillion
Approximately 59.7% of reported income was therefore realised, while approximately 40.3% was unrealised.
This distinction is central to understanding the debate surrounding the 22.53% declaration.
What exactly was unrealised?
NSSF's disclosures indicate that the approximately UGX 2.62 trillion of unrealised income consisted principally of gains on investment assets together with foreign-exchange gains.
Approximately UGX 2.45 trillion related to investment-asset gains, while approximately UGX 173 billion related to foreign-exchange gains.
Composition of Unrealised Gains
Approximately UGX 2.62 trillion
This is an important observation. Foreign-exchange gains represented only about 6.6% of the unrealised gains. The much larger component was appreciation in investment assets.
Commentary focusing exclusively on currency revaluation therefore risks giving a misleading impression of what actually drove NSSF's exceptional reported income.
An unrealised gain is not necessarily fictitious income
Consider a simplified example.
Suppose NSSF purchases shares for UGX 100 billion and those shares subsequently have a market value of UGX 160 billion.
Economically, NSSF has become UGX 60 billion wealthier. Depending upon the applicable accounting classification and IFRS requirements, that increase may have to be reflected in the Fund's financial statements.
But NSSF has not necessarily received UGX 60 billion in cash.
If the shares subsequently decline to UGX 120 billion, UGX 40 billion of the previously recognised appreciation disappears.
An unrealised gain can represent genuine economic wealth while still being exposed to reversal before the investment is sold.
Foreign-currency investments can produce a similar effect. If NSSF owns assets denominated in Kenyan shillings, Tanzanian shillings, US dollars or another currency, movements in the Uganda shilling can change the UGX value of those investments without NSSF selling them.
These are genuine changes in economic value. They are not necessarily accounting inventions.
But they remain unrealised.
Recognising the gain is not the same as distributing it
This distinction is critical because there are actually two separate questions:
- Should NSSF recognise fair-value and foreign-exchange gains in its financial statements?
- Should those unrealised gains be used in determining interest permanently credited to members?
They are not the same question.
NSSF prepares its financial statements within a framework that includes International Financial Reporting Standards (IFRS). Depending on the classification of an investment, IFRS can require fair-value and foreign-exchange movements to be recognised in financial statements.
Therefore, the mere presence of unrealised gains in reported income is not, by itself, evidence that NSSF manipulated its accounts.
Indeed, ignoring economically significant changes in investment values could itself result in financial statements that fail to reflect the economic position of the Fund.
The more difficult question comes afterwards: how much of that economic gain should be converted into interest credited permanently to members?
The crucial comparison: UGX 3.88tn realised versus UGX 5.44tn credited
This is perhaps the most important comparison in the entire debate.
Realised Income vs Interest Credited
Put differently, NSSF credited approximately 40% more than the Fund's realised income for the year.
The 22.53% declaration therefore cannot be explained solely by investment income that NSSF realised during FY2025/26.
Some portion of the distribution was necessarily supported by unrealised gains and/or other available reserves.
Reported profit was nevertheless sufficient to cover the distribution
There is an important qualification.
NSSF reported profit after tax of approximately UGX 5.892 trillion.
Against this, approximately UGX 5.444 trillion was credited to members.
Consequently, NSSF did not distribute more than its total reported accounting profit.
How Reported After-Tax Profit Was Allocated
Reported after-tax profit: UGX 5.892 trillion
Approximately 92.4% of reported after-tax profit was effectively allocated as member interest, leaving approximately UGX 448 billion.
The accounting question is therefore not whether reported profit was sufficient. It was.
The more important issue concerns the quality and reversibility of the earnings underlying that profit.
The critical accounting asymmetry
Before an unrealised gain is distributed, it belongs to the Fund and fluctuates with the value of the underlying investment.
Once interest is credited to a member's account, however, it becomes part of that member's accumulated benefit.
The asymmetry
Investment asset:
Can rise in value and subsequently fall in value.
Interest already credited to members:
Cannot simply be taken back because markets subsequently fall.
Imagine that an equity portfolio appreciates by UGX 2 trillion. NSSF recognises the gain and uses part of it when determining member interest. Members' balances consequently increase.
If markets subsequently fall by UGX 1.5 trillion, NSSF can recognise the decline in the value of its investments.
But it cannot simply reduce every member's previously credited interest by a corresponding amount.
A potentially reversible asset valuation has therefore helped create an effectively non-reversible member entitlement.
This is arguably the strongest financial argument in the current debate.
It does not mean NSSF paid UGX 5.44 trillion in cash
Another misconception should be avoided.
Crediting UGX 5.44 trillion to members does not mean NSSF transferred UGX 5.44 trillion out of its bank accounts immediately.
The amount is primarily credited to members' individual NSSF balances.
Actual benefits paid during FY2025/26 were approximately UGX 1.55 trillion, compared with approximately UGX 2.42 trillion received in member contributions.
Member Contributions vs Benefits Paid
Contributions exceeded benefits paid by approximately UGX 870bn.
Nothing in these figures, by itself, demonstrates an immediate liquidity crisis.
The more relevant issue is the Fund's long-term balance-sheet resilience if some of the exceptional valuation gains subsequently reverse.
The intergenerational fairness question
Pension funds also have to consider fairness between members who leave the Fund today and those whose savings will remain invested for decades.
Consider Member A, who retires immediately after receiving the 22.53% interest credit.
If Member A withdraws the accumulated benefit, part of that amount may economically reflect investment appreciation that NSSF has not yet crystallised.
If the market subsequently reverses, Member A has already exited. Members remaining in the Fund bear the subsequent investment consequences.
However, the opposite policy can also produce unfairness.
Suppose members' money financed an investment purchased for UGX 100 billion many years ago that is now reliably worth UGX 500 billion.
A member retiring today could reasonably argue that some of that UGX 400 billion economic appreciation was generated while his or her savings were invested in the Fund.
A rigid policy that ignores all unrealised appreciation until an asset is sold could therefore disadvantage departing members.
This is why pension funds require clearly articulated policies governing reserves, smoothing and the distribution of investment returns.
22.53% should not be interpreted as NSSF's new normal return
Perhaps the most important message for members is that the record rate should not automatically be treated as NSSF's sustainable annual earning rate.
FY2025/26 Income Growth
The enormous difference between these two growth rates illustrates how important unrealised investment appreciation was to the year's exceptional reported result.
Equity markets do not appreciate at extraordinary rates every year. Nor do favourable currency movements continue indefinitely in one direction.
The 22.53% rate should therefore be understood in the context of an unusually strong investment year rather than assumed to represent NSSF's new recurring investment yield.
Was this creative accounting?
On the publicly available information, describing the entire result as "creative accounting" is too simplistic.
NSSF openly reports that approximately UGX 2.62 trillion of its income was unrealised.
Recognition of investment revaluations and foreign-exchange movements can be required under applicable financial-reporting standards.
The existence of those entries therefore does not, by itself, demonstrate manipulation of the accounts.
But a legitimate and considerably more important question remains.
That question deserves a detailed answer from the Fund.
What NSSF should disclose
The most effective way to resolve the debate would be for NSSF to publish a detailed reconciliation between reported investment performance and the income used to determine the 22.53% member interest rate.
| Component | Amount |
|---|---|
| Realised investment income | Disclose |
| Unrealised investment gains considered distributable | Disclose |
| Foreign-exchange gains considered distributable | Disclose |
| Reserves brought forward or utilised | Disclose |
| Operating costs and taxation | Disclose |
| Interest credited to members | UGX 5.444tn |
Such a reconciliation would allow members to distinguish between recurring investment earnings, valuation gains and any reserves used in determining the declared interest rate.
Conclusion: an exceptional result with an important caveat
FY2025/26 was unquestionably a very strong year for NSSF.
Assets increased to approximately UGX 32.87 trillion. Realised income increased to approximately UGX 3.88 trillion. Contributions increased to approximately UGX 2.42 trillion, and regional equity investments appreciated substantially.
Members have consequently received the largest interest credit in the Fund's history.
But the composition of the return matters.
Approximately UGX 2.62 trillion, or 40.3% of NSSF's UGX 6.51 trillion reported income, consisted of unrealised investment and foreign-exchange gains.
Against realised income of approximately UGX 3.88 trillion, NSSF credited approximately UGX 5.44 trillion to members.
That does not establish that NSSF's accounts are false. Nor does it establish that the Fund is insolvent or facing an immediate liquidity problem.
But it does demonstrate why the 22.53% member return should not automatically be equated with a 22.53% recurring cash return from NSSF's investment portfolio.
A substantial part of the exceptional FY2025/26 result came from investment appreciation that had not been realised at the reporting date.
The fundamental policy question is therefore not whether those gains existed. At the reporting date, they did.
The more important question is whether converting such a large proportion of an exceptional year's unrealised appreciation into effectively permanent member entitlements strikes the appropriate balance between rewarding current members, maintaining adequate reserves and protecting future members against market reversals.
That is the question at the heart of the debate over NSSF's record 22.53% return.
Sources and further reading
NSSF Uganda FY2025/26 Integrated Report
NSSF Annual Members' Meeting and Integrated Report 2026
NSSF Financial and Operational Highlights
FY2025/26 Financial and Operational Highlights
NSSF Five-Year Performance Review
NSSF Five-Year Performance Review
NSSF CFO – Interest and Investments
Interest and Investment Performance
NSSF Board Finance Committee
Finance Committee Report
National Social Security Fund Act
NSSF Act – Uganda Legal Information Institute