social security: annual%20report 2005

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Annual Report & Accounts 2005

2

OUR CORE VALUES

2005Annual Repor t

and Ac c oun ts

OUR MISSION

To administer a SocialSecurity Scheme that pro-

vides financial security to allemployees in Sierra Leone in

the form of Old Age Benefits,Invalidity Benefits andSurvivors Benefits based onSocial Insurance Principles.

OUR VISION

The National Social Security and

Insurance Trust will be the centre ofexcellence providing quality socialsecurity protection through promot-ing a culture of high quality perform-

ance among its staff.

ACCOUNTABLITY

EXCELLENCE

TEAMWORK

RESPECT

W e C a r e




2

HEAD OFFICE

35A Lightfoot Boston StreetFreetownTel: 225365/223814Email:[email protected]: www.nassitsl.org

NDB Building

21 Siaka Stevens Street

FreetownTel:222329/228935

East Area Of f ice

2 Sahara StreetKenemaTel: 032-420518Email: [email protected]

West Ar ea Of f ic e

Pension House30 Howe StreetFreetownTel: 292235Email: [email protected]

Nor t h Area Of f i ce

27A Lady's MileMakeniTel: 076 969895Email: [email protected]

South Area o f f ic e

11 Bojon StreetBoTel: 032-320260/293Email: [email protected]

WHERE TO FIND US




3

Cor porat e Dat a

HEAD OFFICE

35A Lightfoot Boston Street

Freetown

Tel: 225365/220246

Email: [email protected]

W ebsite: www.nassitsl.org

Auditors

PKF

Regent House,

12 Wilberforce Street

Freetown

Bankers

Bank of Sierra Leone

Sierra Leone Commercial Bank Limited

Rokel Commercial Bank Limited

Standard Chartered Bank

Guarantee Trust Bank

First International Bank

International Commercial Bank

Sengu M. Koroma

Solicitor/Secretary




4

PAGE

SUBMISSION LETTER 6

MESSAGE FROM THE CHAIRMAN, BOARD OF TRUSTEES 7

MESSAGE FROM THE DIRECTOR GENERAL 9

BOARD OF TRUSTEES 11

MANAGEMENT TEAM 13

OPERATIONS IN 2005 17

1.0 REGISTRATION 17

1.1 Employers 17

1.2 Insured Persons 18

2.0 CONTRIBUTION INCOME 19

3.0 BENEFITS PAYMENTS 203.1 Government Pension-in-Payment 21

3.2 Gratuity, Ex-gratia and Death Payments 21

4.0 FINANCIAL PERFORMANCE 22

5.0 INVESTMENT PERFORMANCE 23

5.1 Portfolio Composition by Asset Type 23

5.2 Changes in Asset Composition 24

5.3 Income from Investment 24

5.4 Projects and Real Estate 25

5.5 Equity Purchase in Financial Institutions 26

6.0 HUMAN RESOURCES 27

6.1 New Organisational Structure 27

6.2 Staff Training and Development 27

7.0 INFORMATION SYSTEMS 30

CONTENTS




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8.0 ACTUARIAL VALUATION 31

9.0 PUBLIC EDUCATION 32

9.1 Awareness and Perception Survey 33

10.0 CUSTOMER SERVICES 34

11.0 BI-ANNUAL MEMBERS' CONFERENCE 35

12.0 MAJOR ACHIEVEMENTS IN 2005 36

13.0 RISK MANAGEMENT 37

14.0 CHALLENGES FACING THE TRUST 38

LOOKING TO THE YEAR AHEAD 39

REPORT FROM THE BOARD OF TRUSTEES 40

AUDITORS' REPORT 42

INCOME AND EXPENDITURE ACCOUNTS 43

BALANCE SHEET 44

CASH FLOW STATEMENT 45

NOTES TO THE FINANCIAL STATEMENTS 46

PHOTO NEWS 54




6

SUBMISSION LETTER

Hon. Alpha O. TimboMinister of Labour, Social Security and Industrial Relations

Ministry of Labour, Social Security and Industrial RelationsNew England Ville

Freetown

Honourable Minister,

RE: ANNUAL REPORT OF THE NATIONAL SOCIAL SECURITY AND INSURANCE TRUSTFOR THE YEAR 2005

As required by Section 16(1) of the NASSIT Act No. 5 of 2001, I hereby submit the Annual

Report and Accounts of the National Social Security and Insurance Trust for the year 2005.

The Report summarises:

a) the Trust's Operational performance for the Financial Year 2005; and

b) the audited Financial Accounts for the same period.

I look forward to our continued cooperation.

Yours Sincerely,

…………………………………

Andrew KeiliChairman, Board of Trustees



On behalf of the Board ofTrustees of the NationalSocial Security and

Insurance Trust, NASSIT, I have

the honour to present the Trust'sAnnual Report for the period 1st

January 2005 to 31st December2005.

I am extremely pleased to reportthat the Trust's performance dur-ing the year under review was veryimpressive in terms of member-

ship, contributions, magnitude of

investments and income frominvestments. The Fund recordedpositive growth in all its perform-ance indicators.

On the national front, the coun-try's economic performance con-tinued to improve, with an impres-sive growth rate and good fiscalperformance, generally. Increasedactivities were reported in many sectors, resulting in increased investments and employment.The large scale mining sector in particular showed signs of revitalisation, with intensification of

work for the restart of some mines. Positive changes in legislation and regulations and new ini-tiatives resulted in increased investment generally in many sectors.

Performance indicators improved considerably over 2004. Membership rose from 102,895 in2004 to 114, 234 in 2005. The total surplus of the Trust grew by 55 percent over the 2004 figureto reflect an accumulated surplus of Le 118.4 billion. The increased membership contributions,payment of arrears and an increase in investment income were the main contributory factors.

The percentage of contributions attributable to the private sector rose significantly by 37 percentover the 2004 figure. Investment performance was good.

A total of Le 114.43 billion was invested, mostly in government securities. The average return oninvestment at 19.71 percent was considerably above that budgeted. Work was done in formu-lating strategies for various areas of the Trust's work and the setting up of relevant structures.

The capacity of the Investment Department was strengthened to cater for project appraisal andmonitoring requirements especially for investments in the infrastructure areas.

An Actuarial Valuation as at end of 2004 was completed. The report reaffirms the financial via-bility of the scheme. The scheme can last for another 20 years without requiring an increase incontribution rates if there is no marked adverse deviation from its present path.

Recommendations to provide a grandfathering provision for the private sector and to allow retire-ment at age of 55 for the Forces has been accepted by the Board and recommended to gov-ernment.


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Mr. Andrew Keili

Chairman, Board of Trustees

MESSAGE FROM THE CHAIRMA N, BOARD OF TRUSTEES




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A first Members' Conference provided the opportunity for consultation and dialogue between theTrust's management and a wide array of its contributors and other stakeholders to promote mutu-al understanding of needs and concerns. A well designed training programme has accorded theopportunity to staff to undergo training to meet the myriad challenges of implementing the

scheme.

Despite our best attempts at managing the Trust well, we are however faced with immense chal-lenges. One of the biggest challenges Sierra Leone faces is creating formal sector jobs. NAS-SIT could be a major avenue for the country's strategy of diversifying the economy and creating jobs.

Plans are afoot to start work on revising the NASSIT Act, taking issues that are thought pertinentby stakeholders, after the lessons learnt during the initial years of the scheme's operation. Wealso face immense challenges attempting to reform and expand the existing systems in order toimprove benefits, extend coverage and achieve greater efficiency and effectiveness.

Plans for having a capital market, more varied financial instruments and general attempts by gov-

ernment to remove Administrative barriers to doing business will bode well for the scheme. Thereare indeed immense opportunities for the growth of the scheme especially with the expansion ofthe private sector.

The successes mentioned would not have been realised and sustained without the support of allstakeholders (the government, employers, employees and NASSIT staff). I therefore wish to paytribute to the government for nurturing a stable political environment in the country and serious-

ly attempting to engender a favourable and conducive investment climate. Government supportin myriad forms will be needed on an incessant basis and we have no doubt that this will con-tinue to be provided.

Lastly, I would like to thank fellow Board members for their continued commitment in guiding theaffairs of The Trust. My thanks also go to members of senior management and staff for theirtenacity, professionalism and their continued commitment to the Trust.

.................................................

Andrew Keili

Chairman, Board of Trustees



2005has been aneventful yearfor us. A lot

was achieved in advancing social

security in Sierra Leone throughour collective efforts, mutual sup-

port and cooperation. During 2005,the staff displayed tremendousenthusiasm and initiative as westrive to widen membership andincrease the level of compliance.In2006, we would, therefore, seek tobuild on this strong foundation as

we strive to strengthen social

security in the country with a keyfocus on information systems, cus-tomer services and risk assess-ment and monitoring.

Information Systems

Work on the biometric registrationsystem will commence during2006 and will be fully integratedwith our existing IT Infrastructure.This is aimed at improving service delivery to better serve our members. The existence of a qual-

ity information technology is critical for the proper management and flow of data in any socialsecurity system.

Investments and ProjectsIn 2006, our first investments in the real estate sector: (i) the Sierra Concrete Products Limited;(ii) the Regimanuel Gray (SL) Limited; and (iii) the Guoji Property Development Company will befully operationalised. The Investment and Projects Department is also currently reviewing ourinvestment policy and strategy aimed at greater diversification of our portfolio while contributing

to the economic and social development of the country.

Customer Service and Corporate ImageImproving customer satisfaction through efficient service delivery to enhance our corporateimage remains an overriding priority for top management. During the year, work will commenceon the construction of high quality Area Offices in the regions, including securing permanent

housing for the West Region Office. The aim is to improve the work environment for our staffand provide a more attractive environment for our members/customers.

Risk MonitoringThe 2005 Risk Assessment Report has been issued to all staff. All staffs must recognize the risksthey face in carrying out their respective duties and to be familiar with the mitigating actions that

are being put in place to minimize these risks.

New Organisational StructureIn order to better meet the challenges of our objectives set out in the strategic plan and facilitate


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MESSAGE FROM THE DIRECTOR GENERAL

Mr. Edmund Koroma

DIRECTOR GENERAL




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the efficient delivery of service, the organizational structure was realigned to enhance our humanresource capability. In this financial year, we will continue to implement the new organizationalstructure focusing on filling the vacancies approved.

Human Resources

All employees benefited from several programmes which were conducted internally while sever-al benefited from training done externally. Our training programmes focused on customer serv-ice, compliance, information technology, benefits, actuarial science and legal. Training on TeamBuilding Skills was also conducted for some management staff during December 2005.

New Staff

We welcome our new staff to the organization and hope they will espouse our cherished values.I am confident that with their qualifications and experience, they will re-energize the respectivedepartments/divisions where they are attached.

Conclusion

Let me thank all of you, our loyal and committed employees, for your continued support and

cooperation. The service and performance improvements we achieved in 2005 were only possi-ble through your hard work and dedication. To Management, I say thank you for your outstand-ing performance and your demonstrated commitment.

As we start another year, I record our unwavering commitment to channel our energies towardsmeeting the expectations of our stakeholders fully aware of our role to ensuring greater socialprotection for our insured members and their dependants. We also renew our commitment to

provide quality service and enhance accountability in the administration of the National SocialSecurity and Insurance Trust.

......................................................................Edmund Koroma

DIRECTOR GENERAL




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Mr. Andrew Keili

(Chairman)

Mr. Edmund Koroma

Director General

Dr. J.D. Rogers

Representing The Central Bank

(Trustee)

Ms. Teresa A. Vamboi

Representing the

Min. of Social Welfare, Gender

& Children's Affairs

(Trustee)

Dr. Samura M.W. Kamara

Representing the

Min. of Finance (Trustee)

Mr. Brima A. Kamara

Representing the Forces

(Trustee)

Mr. Kandeh B. Yillah

Representing

Sierra Leone Labour Congress

(Trustee)

Mrs. Gladys Strasser-King

Representing Sierra Leone

Insurance Association (Trustee)

Mr. Leonard E. Johnson

Representing

Employers Federation

(Trustee)

BOARD OF TRUSTEES




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Mr. Muctarr Williams

Representing

Sierra Leone Labour Congress

(Trustee)

Mr. Felix Rhodes

Representing

Employers Federation

(Trustee)

Mr. Sengu M.Koroma

Solicitor/Secretary

Mr. Joseph P. Genda

Representing the

Min. of Labour, Social Security

and Industrial Relations.(Trustee)

Mr. Festus Minah

Representing

Sierra Leone Teachers Union

(Trustee)

Mr. Muluku S. Tarawally

Representing Civil Servants

(Trustee)

BOARD OF TRUSTEES




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Mr. Edmund Koroma

Director General

Mr. Gibril Saccoh

Deputy Director General,

Membership

Mr. Sahr J.B. Ngayenga

Deputy Director General,

Administration

Mr. S Gbawuru-Mansaray

Director, Systems &Technology

Mr. Ibrahim Bah

Director of Finance

Ms. Georgiana Thompson

Director, Public Affairs &

Customer Service

Mr. Sengu M. Koroma

Director, Legal Affairs and

Board Secretariat

Mr. Mohamed Gondoe

Director of Operations

Ms. Mahawah Silla

Head, Benefits

MANAGEMENT TEAM




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Mr. Joseph Mans Jr.

Head, Admin. & facilities

Mr. Amara Kargbo

Head, IT & Records

Mr. Andrew M. Allieu

Head, Research, Planning and

Actuarial Department

(On Study Leave)

Mr. Peter Kenah

Head, Public Affairs

MANAGEMENT TEAM

Mr. Mahmoud Idriss

Head, Investments & Projects

Mr. Davidson Peters John

Chief Manager,

Internal Audit

Mrs. Victoria Mansaray

Head, Government. Operations

Mr. Amadu F. Dainkeh

Area Manager,

North Region

Mr. Idris Turay

Area Manager,

West Region




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Mr. Edwin Kamara

Manager, Benefits

Mr. Foday Koroma

Manager, Facilities

Mr. Desmond B. Edwards

Head, Prosecutions Unit

Mr. Ishmail Kaetu Yillah

Head, Corporate Law Mr. Sadique Fofanah

Head, Benefits Queries and

Complaints

MANAGEMENT TEAM

Mr. Brima I.B. Kargbo

Ag.Head, Research, Planning

& Actuarial

Mr. Bai E. Tarawalie

Ag. Area Manager,

East Region

Mr. Julius Michael

Head, Accounts

Mr. Ahmed B. Kamara

Head, Compliance Unit




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Mr. Daniel Khanu

Manager, Investment & Projects

MANAGEMENT TEAM

Mr. Momodu Maligi

Head, Customer Service

Mr. Ismail B. Kandeh

Ag. Area Manager,

South Region

Ms. Dewo Ngombu

Ag. Head, Human Resource

Development



OPERATIONS IN 2005

1 .0 REGI STRAT ION

1.1 Employers

In 2005, the registration of establishments increased to 2,251 from 1,598 in 2004, an increase ofabout 41 percent. Active employers as at end December 2005 stood at 2,251. The number of

new registrations in the private sector stood at 646. Only seven new establishments were regis-tered in the public sector. The trend in employer registration is shown in Table 1.

Table 1: Registered Employers by Type and Region, 2003-2005

Region/Department No. of Employers No. of New Employers

2003 2004 2005 2003 2004 2005

GOVERNMENT 10 18 25 8 8 7

PRIVATE INSTITUTIONS

West 1,030 1,219 1,647 1,030 189 428

North - 52 131 - 52 79

South - 142 235 - 142 93

East - 167 213 - 167 46

Sub Total 1,030 1,580 2,226 1,030 550 646

TOTAL 1,040 1,598 2,251 1,038 558 653

The distribution of registered employers by economic sector is shown in Table 2. About 47 per-cent of registered employers are in the Services Group followed by Wholesale and Retail Trade(37.67 percent).

Table 2: Registered Employers by Economic Sector 1 , 2005

Economic Sector Number % of Total

Agriculture 19 0.84

Wholesale and Retail Trade 848 37.67Transport, Storage and Communication 56 2.49

Communication Social/Personal Services,

Extra-Territorial Bodies & Household with employed persons 34 1.51

Financial Intermediations 28 1.23

Hotels & Restaurants 59 2.62

Manufacturing 52 2.31

Mining & Quarrying 22 0.98

Services 1,047 46.51

Construction 78 3.47Electricity, Gas & Water Supply 8 0.36

Total 2,251 100.00


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1Using International Standards of Industrial Classification




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1.2 Insured Persons

Registration of Insured Persons increased substantially from 102,895 in 2004 to 114,234 in 2005,

an increase of about 11 percent. In 2005, the number of newly registered insured persons isabout 11,339. About 8,560 are in the private sector, including the self-employed. The number ofnew registrations in the public sector is about 2,782 (see Table 3).

The number of newly registered self-employed persons increased from 13 persons in 2004 to439 as at end December 2005.

Table 3: Insured Employees by Establishment Type and Region, 2003 - 2005

Region/Department No. of Employees No. of New Employees

2003 2004 2005 2003 2004 2005

GOVERNMENT 63,359 65,018 67,800 63,359 1,659 2,782

PRIVATE INSTITUTIONS

West 31,958 33,915 38,516 31,958 1,957 4,601

North - 715 2,809 - 715 2,094

South - 1,663 2,441 - 1,663 778

East - 1,571 2,229 - 1,571 658

Sub Total 31,958 37,864 45,995 31,958 5,906 8,131

TOTAL 95,317 102,882 113,795 95,317 7,565 10,913




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2.0 CONTRIBUTION INCOME

Contribution income increased to Le 40.6 billion in 2005 from Le 28.9 billion in 2004, an increase

of about 41 percent. Contribution income comprises Le 20.6 billion from government and Le 20billion from private sector establishments, including Sub-vented institutions (See Table 4). Thesignificant increase in contribution income is attributed to improved compliance to the Fund as

operational procedures improve with increased cooperation from employers.

The issuance of members' statements for the first time during the year improved confidence in

the scheme for both employers and employees alike.

Table 4: Contribution Collection by Establishment and Region, 2003 - 2005

CURRENT CONTRIBUTIONS (Le) ARREARS2 (Le)

2003 2004 2005 2003 2004 2005

GOVERNMENT 17,626,818,134.40 14,217,003,155.36 20,604,096,707.26 6,303,040,138.07

PRIVATEINSTITUTIONS

WEST 12,700,534,214.15 n/a 18,073,257,549.40 n/a n/a 1,700,023,891.81

NORTH - 242,343,883.000 629,164,513.65 n/a n/a 699,059,105.50

SOUTH - n/a 1,249,648,172.55 n/a n/a 461,720,991.07

EAST - n/a 111,099,676.95 n/a n/a 402,466,362.09

Sub Total 12,700,534,214.15 14,674,022,923.03 20,063,169,912.55 n/a n/a 3,263,270,350.47

TOTAL 30,327,352,348.5 28,891,026,078.3 40,667,266,619.81 n/a n/a 9,566,310,488.54

2Government arrears relates to amounts owing for the validation of past services of Government employees.




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3.0 BENEFIT PAYMENTS

Benefits payment amounted to about Le 625.8 million in 2005 compared to Le 172.2 million in2004. Payments for invalidity benefits were made for the first time during 2005. The increase inbenefits payments during 2005 reflects an effective benefits uptake strategy adopted by theFund.

In 2005, of the total benefits paid, retirement grants constitute 87 percent; Survivors' grants 12

percent; and Invalidity grants 1 percent. (Table 5).

Table 5: Scheme Benefit Payments, 2003 - 2005

2003 2004 2005

TYPE OF NO AMOUNT(LE) NO AMOUNT(LE) NO AMOUNT(LE) SHARE

BENEFIT (%)

RETIREMENT 16 26,491,801.45 373 157,967,932.17 631 547,024,335.56 87

SURVIVORS 11 15,041,477.08 19 14,270677.11 90 73,638,445.48 12

INVALIDITY - - - - 11 5,174,270.30 1

TOTAL 27 41,533,278.53 392 172,238,609.28 732 625,837,051.34 100




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3.1 Government Pension-in- Payment

In 2005, government pension processed amounted to Le 6 billion while the amount actually paidis Le 5.7 billion. The total number of beneficiaries was 17, 575.

Table 6: Government Pension in Payment, 2004 - 2005

AREA OFFICE 2004 2005Roll No. Amount(Le) Roll No. Amount(Le)

East Region 489 103,196,452.91 580 171,877,184.53

North Region 589 50,281,873.00 574 131,675,058.67

South Region 1,391 300,414,370.30 1,425 425,050,005.35

West Region 10,251 2,335,830,605.84 11,102 3,200,011,370.41

Payment by Banks 2,241 1,350,433,618.1 2,439 1,810,979,177.61

K.I.A - Cash 1,488 192,670,655.6 1,439 263,939,601.45

K.I.A - Banks 19 2,261,800 16 2,843,375

Total 16,468 4,335,089,375.75 17,575 6,006,375,773.22

3.2 Gratuity, Ex-gratia and Death Payments

An amount of Le 2.6 billion was paid in respect of gratuity, ex-gratia and death benefits to retired

employees in Government establishments or their surviving relatives. The total number of bene-ficiaries in this category was 566.




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4.0 FIN ANCIA L PERFORMAN CE

Income

In 2005, contribution income amounted to Le 40.6 billion compared to Le 28.9 in 2004.Income received from investments increased by about 50 percent from Le 11.3 billion in 2004 to

Le 16.9 billion in 2005.

Expenditure

The total amount paid for scheme benefits (excluding contributions refunded) increased from Le172.2 million in 2004 to Le 625.8 million in 2005. Government pensions, including gratuity andex-gratia payments, amounted to Le 8.8 billion.

In 2005, administrative expenses amounted to Le 14.5 billion, including depreciation charges,from Le 6.93 billion in 2004. The substantial increase in administrative expenses in 2005 over

2004 relates to the priority given to:

Publicity to promote greater understanding of and acceptance of Social Security princi-ples and practice and confidence in the national scheme

Training in core operational processes and procedures provided to staff including exter-nal technical assistance for the installation of and training in NAPOS and other IT soft-

ware

A nationwide registration and sensitisation exercise for government workers

The refurbishing of Area Offices to improve the image of the Trust and additional office

space acquired at NDB building to accommodate additional staff

The increase in staff strenght from a roll of 155 in 2004 to 220 employees in 2005

Reserves

In 2005, despite the higher administrative expenditure, income surplus increased to Le 42.6 bil-lion from Le 34.4 billion in 2004. Thus, net assets or reserves increased to Le 118.4 billion in2005 from Le 76.6 billion in 2004.




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5.0 INV ESTMENT PERFORMAN CE

5.1 Portfolio Composition by Asset TypeIn 2005, short-term fixed income securities constituted 81.08 percent of the total portfolio. Theshare of equity in the portfolio was 16.60 percent up from 8.9 percent in 2004. A 5-year corpo-rate debenture of Le 6.0 billion was loaned to Sierrablock Concrete Products Ltd, a company

engaged in the production of concrete products. Due to unexpected delays in the start-up ofoperations, no interest was earned on this loan during 2005.

Asset Type Policy Value Share Value Share

Target. 2004 2005

(%) Le'000 (%) Le'000 (%)

Cash Investments 5 2,989,997 4.04 1,960,200 1.71

Call Deposits 2,989,997 4.04 1,960,200 1.71

Fixed Income Assets 20 63,740,900 86.23 92,780,500 81.08Treasury Bills 47,031,000 63.63 76,633,950 66.97

Fixed Deposits 4,000,000 3.50

Treasury Bearer Bonds 16,709,900 22.61 12,146,550 10.61

Non-fixed Income Assets 75 7,187,537.30 9.73 19,692,632.6 17.21

Equity 40 6,590,364.30 8.92 18,998,631.3 16.60

o/w SCPL 6,590,364.30 8.92 6,591,364.30 5.76

RGL (SL) Ltd - - 6,400,000 5.59

Barok Project - - 7,267 0.01Corporate Debenture - 6,000,000 5.24

Property 35 597,173 0.81 694,001.3 0.61

0/w Land - Bo 158,990 0.22 158,990 0.14

Land - Kenema 159,200 0.22 159,200 0.14

Land - Kono 194,450 0.26 194,450 0.17

Land - Makeni 84,540 0.11 84,540 0.07

Capitalised Expenses - - 96,821.3 0.08

Total 100 73,918,434.30 100 114,433,063 100




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5.2 Changes in Asset Composition

Total assets increased to Le 114.43 billion in December 2005 from Le 73.92 billion in December2004, an increase of 55 percent. The substantial increase in assets during the period is attribut-

able mainly to: (i) the accumulation of surplus contributions due to rising membership; (ii) lowerthan projected benefit expenditures; and (iii) retained investment income.

Total Portfolio assets increased by 55 percent from Le 73.9 billion in 2004 to about Le 114.4 bil-lion in 2005. Treasury bill holdings increased to Le 76.63 billion in December 2005 from Le 47.03billion in December 2004, an increase of 63 percent. Holdings of Treasury Bearer Bonds reducedfrom Le 16.71 billion in 2004 to Le 12.14 billion in 2005, a decrease of 27 percent. For the first

time, fixed deposits were held with the commercial banks amounting to Le 4.0 billion in 2005.

Table 8: Changes in Asset Composition, 2004-2005

Asset Type Dec-04 Dec-05 Change

(%)

Call Deposits 2,989,997 1,960,200 -34.44

Treasury Bills 47,031,000 76,633,950 62.94

Fixed Deposits - 4,000,000 -

Treasury Bearer Bonds 16,709,900 12,146,550 -27.31

Equity 6,590,364 18,998,362 188.27

Property 597,173 694,001.3 16.21

Total 73,918,434 114,433,063 54.81

5.3 Income from Investment

Total investment income in 2005 amounted to Le 16.9 billion. Investment income was realisedmainly from Fixed Income Government Securities.

Asset Type Average Return (%) Real Return(%)

2003 2004 2005 2003 2004 2005STFI1 16.5 24.54 23.37 3.94 9.06 8.19

5-Yr Debenture - n/a - n/a n/a -

Equity - - - n/a - -

Property - - - n/a - -

Portfolio Returns 16.5 22.77 19.71 3.94 7.64 5.95

1STFI: Short-Term Fixed Income Comprises Call Deposits

In 2005, the average return on Investment for fixed income securities was 19.71 percent com-pared to 22.77 percent in 2004. The lower average return in 2005 resulted from a sharp drop inthe yield for Government securities during the third quarter.

(In Thousands of Leones)




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5.4 Projects and Real Estate

i) Regimanuel Gray (SL) Ltd [RGL (SL) Ltd] In 2005, the Board of Trustees approved the purchase of 40 percent shares in RGL (SL)Ltd, a property development company involved in the construction of high end housesfor sale. The purchase price for 40 percent of the shares amounted to approximately US$2 Million or its equivalent in Leones.

ii) Gouji Property Development Company (SL) Ltd The Board of Trustees also approved the joint venture partnership with Henan GuojiIndustry and Development Company, a company based in China involved in real estatedevelopment for the formation of the Guoji Property Development Company (SL)Limited. The company is registered with an authorised share capital of US$ 10 Million.The Trust acquired 30 percent of the company's equity. The project design is beingplanned to commence works in 2006.

Iii) Progress on the Construction of the Sierrablock Concrete Products Factory

The start-up operations of the Sierrablock Concrete Products Ltd experienced significantdelays. The delays resulted from late delivery of machinery and equipments for the con-struction of the factory.

Construction work in progress

Commercial production should commence by September 2006.




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5.5 Equity Purchase in Financial Institutions

i) Ecobank Transnational Corporation The Board of Trustees approved the purchase of shares worth US $ 1.0 Million inEcobank International, the equivalent of 952,380 shares. The aim is to facilitate theestablishment of a branch of the bank in Sierra Leone as part of national efforts to deep-en the financial sector in the country.

ii) Rokel Commercial Bank (RCB) and National Development Bank (NDB) The Trust submitted two proposals to the National Commission for Privatisation (NCP)following an invitation for bids to purchase government shares in the NationalDevelopment Bank and Rokel Commercial Bank. The Trust has held negotiations withthe NCP on the purchase transaction for the NBD.




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6.0 HUMAN RESOURCES

In 2005, additional staffs were recruited to cope with expanding operations especially increasing

membership and for improved service delivery. Staff strength increased to 220 as at end 2005,from155 in 2004. About 29 percent of staff in the organisation are female. However, only 1.4 per-cent female are in the management cadre. Table 10 provides the breakdown of staff by man-

agement and cadre levels.

Table 10: Staff Distribution by Sex & Level, 2005

CATEGORY

No % of Total No % of Total TOTAL

Executive 7 3.2 1 0.5 8

Senior Management 12 5.5 2 0.9 14

Middle Management 10 4.6 8 3.6 18

Senior Support 69 31.4 15 6.8 83Intermediate Support 20 9.1 39 17.3 59

Junior Support 38 17.3 - - 38

TOTAL 156 70.91 65 29.09 220

6.1 New Organisational Structure

In 2005, the Board carried out a careful assessment of the structure of management. Theassessment revealed that the existing structure is thin in the middle management level while

some departments/units overlap in their functions.

A new structure was approved by the Board to address these anomalies. The new structure isconsistent with best practise in the operations of social security administration. It will enhancethe attainment of objectives as well as increase accountabilities it will also facilitate transparen-cy in decision making, including a sustainable management of the scheme's finances.

In addition, the Board also approved a Performance Management system that serves as a toolin facilitating the systematic review of the attainment of organisational targets set out in thestrategic plan as well as assessing individual staff performance. Our approach to PerformanceManagement includes:

a) Formal evaluation of performance through appraisal which set targets, reviews

achievement against targets, sets new targets and identifies learning and developmentand a plan for meeting them;

b) Ongoing structure and systematic reviews of progress against targets; and

c) Continuous feedback which acknowledges both success and addresses problems/bot-tlenecks.

6.2 Staff Training and Development

The Board recognises that achieving the targets set out in the strategic plan would require a con-tinuous upgrading of the technical competences and personal skills of our staff. To this end, a

MALE FEMALE




28

significant number of staff at all levels received training in various aspects of social security.

The following core training activities as well as seminars were carried out during the period:

NAPOSThe training of the users of NAPOS was conducted in June 2005. The training covered the con-cepts and features of the NAPOS system and the principles, concepts and operational proce-dures of social security operations in relation to the Area Offices.

Training on Operations and Benefit Procedures

Two senior staff from the National Social Security Fund (NSSF), Tanzania, visited Freetown toprovided training to staff on operational procedures including compliance monitoring and bene-fits administration.

Standards Organisation of Nigeria (SON)A team from the Standards Organisation of Nigeria provided training to a cross- section of

Management staff in Quality Management during May 2005. The aim of the course was to train

management staff in the fundamentals and procedures of quality management. It also providedguidelines in the preparation of a Quality Management Manual which should subsequently resultin certification/accreditation by the International Standards Organisation.

World Bank Pension Reform Options Simulation Toolkit (PROST)Two staff from the Pensions Unit of the World Bank provided technical assistance to staff in the

Benefit, Research and Investment Departments on the use of the PROST Model during May2005. The team also undertook an initial assessment of the policy and operational issues facingcontractual savings and old age income protection in Sierra Leone, particularly for NASSIT.

Customer CareFJP, a management consulting firm, provided training to 89 Staff of all levels in customer serv-

ice with a view to enhancing workforce attributes and improving communication. The objective isto meet customer requirements and strive to exceed their expectations. Further training isplanned for all new staff.

Training in Actuarial ScienceThe Head, Research, Planning and Actuarial, Mr. Andrew Allieu, proceeded to Switzerland topursue the Master of Science in Actuarial Science at the University of Lausanne.

Team Building Skills

A seminar for senior members of Management entitled "Personal Success-Powerful Relation"was organised by FJP Management Engineering.

Study Tours to NSSF TanzaniaSeveral members of staff benefited from training in Operational procedures and Benefits

Administration at the NSSF Tanzania. Study visit were also made to PPF and PSPF Tanzania. Across section of the Board of Trustees also visited NSSF during the period.

Study Tours to SSNIT GhanaSeveral members of Management visited the Social Security and National Insurance Trust of

Ghana to acquaint themselves with social security operational procedures including prosecutionof delinquent institution.




29

International Conference on Investment of Social Security Funds, Merida MexicoThe Director General, Mr. Edmund Koroma, the Head, Investment and Projects, Mr. MahmoudIdriss, the Head Treasury Management, Ms. Fatmata Sesayand Quality Assurance and Technical Assistant, Ms. Euniece During attended this conference.

Launching of the Social Health Insurance Scheme Benefits - TanzaniaMr. Gibril Saccoh, the Deputy Director General, MFST, attended the launching of the abovescheme in Tanzania in July 2005.

ISSA IT Seminar in MoscowMr Amara Kargbo, Head, IT and Records and Mohamed B Jusu, IT officer, South Area Office

attended the ISSA IT Seminar in Moscow.

ISSA Statistical Seminar in Arusha, TanzaniaThe chairman, Board of Trustees, Dr. J A L Kamara, Head, Research, Planning and ActuarialDepartment, Mr. Andrew M Allieu and Head, Investment and Projects, Mr Mahmoud Idrissattended the above mentioned ISSA Training Programme.

Internet Security - Kofi Annan Centre for ExcellenceTwo staff from the Systems and Technology Division attended the Enterprise IT System SecurityWorkshop in Ghana.

Audit Seminar in New YorkTwo senior management staff from the Internal Audit Department attended the above audit train-

ing programme.

Finally, the Director General participated in the ISSA Regional Meeting for Africa as well as the

Third Contractual Savings Conference organized by the World Bank in Washington D.C.




30

7.0 INFORMATION SYSTEMS

An efficient Management Information System is crucial for maintaining an accurate database on

members, payment of benefits, enhancing internal controls and proper planning. Accordingly, aninformation system architecture that will help in the development and delivery of social securityhas been put in place.

Currently, our information system includes member registration, contribution accounting, contri-bution management, benefit processing and payment, provision of individual social security

members' statement and social security cards. Local area networks have been implemented inall our offices. A Wide Area Network (WAN) has been introduced to ensure complete and accu-rate data entry, retrieval and processing in real time. The WAN facilitated the streamlining of pro-cedures to improve customer service as well as the flow of information to facilitate data transfer.It also provides an Internet service to all its offices.

There are plans to implement a Biometric Registration System in early 2006. When fully imple-

mented, this system would re - enroll members of the scheme, identify individuals according to

their biological traits including fingerprints and face recognition, and be capable of searching,verifying and retrieving individual records from a large database. Each registered member of thescheme will be re-issued with an ID card with the social security number. The base design of thiscard will incorporate a combination of security features and a bar code.

The provision of a single logical data repository is central to the corporate IT strategy. This repos-

itory could support all the Trust's core business activities, reduced duplication of stored data andcosts to the contributor, and decrease fraudulent claims. It also ensures that the information com-mon to different benefits only needs to be capture once.




31

8.0 ACTUARIAL VALUATION

In line with Subsection (1) of Section 47 of the NASSIT Act, the first actuarial review of the Trusttook place during the review period. The actuarial valuation is the fundamental test of the finan-cial viability of the Scheme.

The external actuarial consultant, Georges Langis, visited Freetown during October 2005 to con-duct assessments, collect relevant data and held consultations with several key stakeholders.

The results was made public earlier in 2006.




32

9.0 PUB LIC EDUCATION

In 2005, there was a significant improvement in our information processes aimed at enlightening

our esteemed members on the benefits of the scheme. Thus, the Trust embarked on a proac-tive, rigorous and aggressive sensitization campaign covering the entire country.

The services of major radio stations (UNAMSIL, FM 98.1, KISS 104 FM, Eastern CommunityRadio) as well as TV stations across the country are being utilised to feature weekly sensitiza-tion messages as well as the hosting of panel discussions. These radio and television pro-

grammes provided a forum where members and potential members are sensitized on theScheme. Face-to-face sensitizations were also conducted in about 589 institutions countrywide.

As part of the information dissemination strategy, forty-one billboards carrying NASSIT mes-sages were installed at strategic locations in several parts of the country.

Public education at the Sierra Rutile mining site, Mobimbi.

One of the NASSIT billboards located around the country




33

9.1 Awareness and Perception Survey

The Trust commissioned an Awareness and Perception Survey in March 2005. The aim was to

generate base line data on public awareness of the scheme benefits and their perceptions onthe operations.

The evidence from the survey suggests a significant level of awareness of the National SocialSecurity Scheme and certain aspects of its activities. The results reveal an awarenesslevel/index of 58 percent and 39 percent for contributors and non-contributors respectively. This

seems a pay-off from the massive awareness campaign undertaken in early 2005.

The evidence also shows that the public's perception of the Trust's ability to deliver on its man-date to be generally good. About 57 percent and 51 percent of contributors and non-contributors,respectively, are satisfied with the management and operations of the Scheme. Management willseek to improve these ratings by ensuring that the objectives of the organization are continuouslylinked to customer needs and expectations.




34

10 .0 CUSTOMER SERVICES

As part of our key commitment to making sure we focus on what matters most to our customers

and clients, a customer complaints policy was put in place in 2005 and a complaints register ismaintained in all the Area Offices. The complaints register documents, monitor and record feed-backs on customer complaints.

To this end, Counter Benefit Officers and Customer Relations Officers have been appointed inall Area Offices. The Counter Benefit Officers assist members with the processing of claims while

the Customer Relations Officers addresses complaints and questions relating to the scheme.




35

11 .0 B I-ANN UAL MEMBERS' CONFERENCE

The Trust held its First National Members Conference on the 16th - 17th November, 2005.

Participants were drawn from various employer institutions and other stake holders. The objec-tive of the conference was to open up information on the activities of the Trust to our respectedmembers.

Two International experts on Social Security were in attendance and made presentations onregional and country experiences on social security issues. Senior management staff of NASSIT

discussed in greater detail the core functions of the Trust and responded to questions from theparticipants during the second day of the Conference.




36

12.0 MAJ OR ACHIEVEMENTS IN 2005

Our performance Scorecard below details some of our major achievements in 2005:

a. the insured population increased from 102,895 in December 2004 to 114,234 as at endDecember 2005, an increase of 11 percent;

b. active employer population increased from 1,598 employers in December 2004 to 2,251

employers as at end December 2005, an increase of 41 percent;

c. contribution income in 2004 was Le 28.89 billion and amounted to Le 40.6 billion in2005, an increase of 41 percent;

d. Scheme benefit payments amounted to Le 625.8 million as at end December 2005 com-pared to Le 172.2 million in 2004;

e. the number of beneficiaries of Scheme benefit payments were 732 in 2005 compared to

392 in 2004;

f. investment income in 2004 was Le 11.3 billion compared to Le 16.9 billion as at endDecember 2005;and

g. total accumulated reserve have increased from Le 76.62 billion as at end 2004 toLe118.4 billion as at end 2005.




37

13.0 RISK MANAGEMENT

Our Risk Management strategy and policy lays out the aims and objectives of the organisation

with regard to managing risk. It involves the identification, management and economic control ofrisks to which the institution is exposed. The benefits and opportunities of risk management areviewed not just in the context of the activity itself but in relation to many and varied stakeholders

who can be affected.

In 2004, an initial baseline risk assessment commenced the continual cycle of identifying and

resolving risks. An initial Master List of Risks was also produced following this assessment.In 2005, the Board approved a Revised Risk Management Framework was completed which out-lines the need for effective Corporate Governance through a sound corporate Business risk man-agement. The revised framework emphasizes risk assessment as a continuous and developingprocess central to the institution's strategy as well as the implementation of that strategy. Thecontinual assessment work will be undertaken primarily through a self assessment process withreviews of risks on a quarterly basis. Training is being given to improve risk identification, the

development of control measures and compliance with procedures.

The Board monitors the institutional risk profile, primarily through its Audit Committee. Overallimplementation of the Risk Management Strategy is monitored by the Risk ManagementCommittee. The Head of Internal Audit is appointed as the Chief Risk Officer, supported by RiskCoordinators drawn from Senior Management.

A risk register has been established on which a record of all risks, together with impact assess-ments and details of control mechanisms are kept. Managers will ensure that any training anddevelopment needs identified in the Risk Register are incorporated into the Trust's annual train-ing programmes.




38

14 .0 CHAL LENGES FACING TH E TRUST

Despite the achievements indicated above, the social security institution faces numerous chal-lenges, arising from its strengths, weaknesses, opportunities and the threats it faces. However,our monopoly position puts us in a good stead to achieve our mission. In this regard, we arebuilding the required structures, facilities and competencies in social security administration to

address the challenges ahead.

A key challenge facing the Trust is the large potential for wider coverage both for the private for-mal sector and informal sector workers. Social security contingencies like medical care, employ-ment injury, funeral and maternity grants are also potential products that can be marketed. Thecontinuing expansion in economic activities may increase the demand for these other socialsecurity products in the years ahead.

Resistance from employers to register their employees and/or pay their contributions is a major

threat to the provision of social security protection for a vast majority of workers. These employ-ers perceive contributions to NASSIT as additional costs given their objective to maximize prof-

its. We are innovating ways to address these challenges in the years ahead.




39

LOOK ING TO THE YEAR AHEAD 2006

In the year ahead, we look forward to building on our strengths; addressing our weaknesses; ris-

ing up to the challenges we face; and utilizing the opportunities at our disposal to grow. We will,therefore, aim to consolidate our gains and improve on our performance, especially in the areaof our membership, while delivering social security to the highest standards.

In this regard, we have set ourselves the following organisational targets.

PERFORMANCE TARGETS FOR 2006

INDICATORS 2005 2006

(Actuals) (Projections)

MEMBERSHIP3

o Formal sector - coverage ratio (%) 58 62.5

o Formal Public (No.) 68,703 70,360

o Formal Private(No.) 46, 411 52,497

o Self Employed (No.) 439 350

COMPLIANCE RATE (%)

o Formal Public (Government) 85 80

o Formal Private Sector 60 65

PROCESSING AND PAYMENT OF BENEFITS

Average claim handing time(No. of Days) 4

o Old age 20 15

o Invalidity 60 25

o Survivor 25 15

ISSUANCE OF SS CARDS AND MEMBERS' STATEMENT

o SS Cards (No. of days) 30 20

o Members' Statement (No. of days) 45 5(upon request)

INVESTMENT PERFOMANCE

Rates of Return (%)

o Average 16 15.06

o/w

Short-Term Fixed Income 23.37 18.10

Equity -

o Real 8.19 3.91

3Total Formal Public Employment is estimated at 82,482 and Formal Private Employment is 113,386 - Source: Employmentand Time spent on Activities in Sierra Leone4The number of days is measured from the date of receipt of completed application form by the counter benefit officer.




40

REPORT FROM THE BOARD OF TRUSTEES

The Trustees are pleased to present this report as part of the financial statements for the

Financial Year 2005. In the preparation of the financial statements, the Trustees confirm that suit-able accounting policies have been applied consistently and reasonably and prudent judgmentsand estimates made.

Statement of the Trustees' Responsibilities

The Board of Trustees is required to prepare financial statements for each financial year that givea true and fair view of the state of affairs of the Trust and of the Income and Expenditure of theTrust for the year. In preparing those financial statements, the Board of Trustees are required to:

a) Select suitable accounting policies and then apply them consistently;

b) Make judgments and estimates that are reasonable and prudent; and

c) State whether applicable accounting standards have been followed, subject to any mate-rial departures and explained in the financial statements.

The Board of Trustees is responsible for keeping proper accounting records which disclose withreasonable accuracy at any time the financial position of the Trust and to enable them to ensure

that the financial statements comply with the Companies Act and the National Social Securityand Insurance Trust Act. They are responsible for safeguarding the assets of the Trust and hencefor taking reasonable steps for the prevention and detection of fraud and other irregularities.

Contributions and MembershipDuring the financial year ended 31st December 2005, the contributing membership stood at114,234 employees. Of these, 67,800 are Government employees and 46,434 are private sec-tor employees. The number of institutions registered with the scheme is 2,251.

BenefitsA total of Le 625.8 Million was disbursed in respect of benefit claims, of this, retirement benefits

amounted to Le 547.02 million; survivors' benefits, Le 73.64 million; and invalidity benefits Le

5.17 million. Refund of contributions amounted to Le 14.5 million.

ReservesThe income surplus for the year ended 31st December 2005 amounted to Le 42.6 billion. Theaccumulated reserves for the period amounted to Le 118.4 billion.

InvestmentIn 2005, Government Securities and Call Accounts accounted for 83 percent of the portfolio. The

portfolio also includes property and equity. Investment income is mainly from short-term fixedincome securities. Income received from investment for the year amounted to Le 16.9 Billion.




41

The composition of the portfolio is shown below:

Value Holding

Le 000 (%)Government Securities and Call Accounts 94,740,700 83

Equity 18,998,632 16

Property 694,001 1

BY ORDER OF THE BOARD:

Mr. Andrew Keili Mrs. Gladys Strasser-King Chairman, Board of Trustee Trustee




42

AUDITORS' REPORT

NATIONAL SOCIAL SECURITY AND INSURANCE TRUSTREPORT OF THE AUDITORS, PKF

To the Board of Trustees of the National Social Security and Insurance Trust

We have audited the financial statements of the National Social Security and Insurance Trust onpages 43 to 53 which have been prepared in accordance with the accounting policies set out onpages 46 to 48.

Respective Responsibilities of Directors and Auditors

The Trustees of the Board are responsible for the preparation of the financial statements of theSocial Security Pensions Scheme. It is our responsibility to form an independent opinion, basedon our audit, on those statements, and to report our opinion to you.

Basis of opinion

We conducted our audit in accordance with International Standards on Auditing. An auditincludes examination on a test basis, of evidence relevant to the amounts and disclosures in the

financial statements. It also includes an assessment of the significant estimates and judgementsmade by the Trustees in the preparation of the financial statements, and of whether the account-ing policies are appropriate to the Trust's circumstances, consistently applied and adequatelydisclosed.

We planned and performed our audit so as to obtain all the information and explanations whichwe considered necessary in order to provide us with sufficient evidence that the financial state-ments are in agreement with the books of account kept by the Trust and to give reasonableassurance that the financial statements are free from material misstatement, whether caused byfraud or other irregularity or error. In forming our opinion we also evaluated the overall adequa-

cy of the presentation of information in the financial statements.

OpinionIn our opinion the financial statements give a true and correct view of the state of the Trust as at31 December 2005 and of the disposition at that date of its assets and liabilities and have beenproperly prepared in accordance with the Sierra Leone Companies Act Cap 249 and the NationalSocial Security and Insurance Trust Act 2001.

Freetown Chartered Accountants

2006




43

NATIONAL SOCIAL SECURITY AND INSURANCE TRUST

Income and Expenditure Account

For the year ended 31 December 2005

2005 2004

Notes Le' 000 Le' 000Income

Contributions received 2 40,666,480 28,891,026

Investment income 3 16,945,061 11,328,204

Sierra Leone Government Receipts 4 8,859,835 5,137,011

Other income 5 27,866 9,148------------- -------------

66,499,242 45,365,389------------- -------------

Expenditure

Benefits paid 6 640,377 311,274

Sierra Leone Government Payments 7 8,805,259 3,764,848

General and Administrative expenses 8 14,486,826 6,925,857------------- -------------

23,932,462 11,001,979------------- -------------

Surplus transferred to Accumulated Fund 42,566,780 34,363,410

======== ========




44


Balance Sheet

As at 31 December 2005

2005 2004Notes Le'000 Le'000

Long Term Investment 19 19,692,633 7,187,537

Fixed AssetsTangible assets 9 5,830,734 1,977,856

Current Assets

Short term investments 10 94,740,700 66,730,897

Stocks 11 40,876 5,421Assets transit account 209,713 401,349Debtors and prepayments 12 3,808,973 4,920,876Cash at Bank and in hand 17 1,847,790 766,093

-------------- -------------100,648,052 72,824,636

Creditors: amounts falling duewithin one year 13 (7,818,711) (5,363,388)

-------------- -------------

Net current assets 92,829,341 67,461,248

------------- -------------

Total assets less current liabilities 118,352,708 76,626,641======== ========

Represented by

Accumulated Fund 18 118,352,708 76,626,641======== ========

Approved on behalf of the Board of Trustees




45


Cash Flow Statement


2005 2004Notes Le'000 Le'000

Operating activities

Cash reciepts from customers 14 67,767,326 42,764,456

Cash paid to suppliers and employees 15 (11,594,377) (7,821,673)

Cash Paid to Government of SL (9,651,004) (2,089,735)

--------------- ---------------

Net cash inflow from operating activities 46,521,945 32,853,048--------------- ---------------

Investing activities

Debenture (6,000,000) -

Barock Investment (7,268) -

Acquisition of plant and equipment 8 (5,023,514) (1,478,701)

Acquisition of short term investments 10 (28,009,803) (25,985,017)

Acquisition of Land (96,828) (597,173)

Sierrablock Project (1,000) (6,590,364)

Equity Investment (6,400,000) -

Proceeds on disposal of Motor Vehicle 98,165 -

--------------- ---------------

Net cash outflow from investing activities (45,440,248) (34,651,255)

--------------- ---------------

Net increase/(decrease) in cash

and cash equivalents 16 1,081,697 (1,798,207)

========= =========




46


Notes to the Financial Statements


1 Accounting Policies

The principal accounting policies adopted by the Trust in the preparation of the financial state-ments are as follows:

(a) Basis of Accounting The Financial Statements are prepared in accordance with the historical cost convention

and standard pension accounting practice.

(b) Contributions

Contributions are accounted for on cash basis. An accrual basis of accounting is not con-sidered appropriate as it would result in substantial debtors accounts which may not berecoverd.

The contribution rates are stipulated in the Social Security Act of 2001 and are as fol-lows:

Employee's contribution - 5% of Earnings

Employer's contribution - 10% of Earnings

The Government pays an additional contribution at the rate of 2.5% of Civil Service pay-roll for 20 years for crediting past service.

(c) Investment Income Investment securities are basically debt securities which the Trust intends to hold untilmaturity and are stated at nominal value. Interest earned on investment securities arereported as interest income as they fall due.

(d) Actuarial position The financial statements summarise the transactions and net assets of the scheme.They do nottake account of the liabilities to pay pensions and other benefits in the future

Section 47 of the National Social Security and Insurance Trust Act 2001 requires that anactuarial valuation be done every 3 years within the first 10 years of operations, andevery 5 years thereafter.

In compliance with the provisions of the Act, an actuarial valuation was done as at 31December2004 by Regie des rentes du Quebec. The opinion of the actuary is that thescheme is financially sound.




47

e) Fixed Assets and Depreciation Equipment, motor vehicles, furniture and fixtures and computer/software are stated atcost less accumulated depreciation.

Depreciation is calculated to write off the cost or valuation of the assets in equal annualinstalments on the following basis:

Equipment 33.3%

Motor vehicles 20%

Furniture and Fixtures 20%

Computer hardware and software 33.3%




48


Notes to the Financial Statements


1 StocksThese stocks which are non-trading in nature are valued at the lower of cost and net real-isable value. Cost includes all direct expenditure incurred in bringing the items to their pres-

ent location.2005 2004

Le'000 Le'0002 Contributions

Sierra Leone Government Employees 20,604,097 14,217,003Purchase of credit 16,512 -Others 20,045,871 14,674,023

------------- --------------

40,666,480 28,891,026======== ========

3 Investment IncomeInvestment income represented interest received on short-term investments.

4 Sierra Leone Government Receipts

Sierra Leone Government administrative cost 444,860 518,667Sierra Leone Government pensions in payment 5,716,416 4,618,344

Sierra Leone Government gratuity payment 2,698,559 -------------- --------------8,859,835 5,137,011

======== ========5 Other Income

Other income includes interest on staff loans and profit on disposal of a motor vehicle.

6 Benefits paidDuring the year ended 31 December 2005, benefits amounting to Le640,377,000 were

paid as follows:

Contributions Returned 14,541 139,035Voluntary Retirement - 4,669Retirement Grant 547,024 153,299Survivors' Grant 73,638 14,271Invalidity Grant 5,174 -

------------- --------------640,377 311,274======== ========




49

2005 2004Le'000 Le'000

7 Sierra Leone Government PaymentsSierra Leone Government benefits payment expenses 182,074 -Sierra Leone Government pensions in payment 5,716,416 3,764,848Sierra Leone Government gratuity payment 2,656,737 -Sierra Leone Government pensions expenses 250,032 -

------------- --------------

8,805,259 3,764,848======== ========

The Trust took over the payment of the Sierra Leone Government Pension roll in May 2004 andGratuity Benefits Payments in June 2005. The Government opted to transfer the quarterlyamount of the Pension and Gratuity rolls to NASSIT to be paid to the pensioners and otherbeneficiaries.

2005 2004Le'000 Le'000

8 General and Administrative expensesDirectors fees and allowances 334,002 188,098Depreciation 1,077,503 548,953

Staff costs 5,111,183 3,996,847Provision for Audit fees 40,000 33,000General expenses 7,924,138 2,158,959

------------- -------------

14,486,826 6,925,857======== ========




50

9 Fixed AssetsFurniture

Land and and Motor Computer/ Work in

Buildings Equipment Fixtures Vehicles Software progress TotalLe'000 Le'000 Le'000 Le'000 Le'000 Le'000 Le'000

Cost

Beginning of year - 623,215 435,929 950,794 1,040,964 - 3,050,902

Purchases during the year 149,520 335,181 280,853 453,947 1,664,052 2,139,961 5,023,514

Disposal - - - (98,035) - - (98,035)

End of year 149,520 958,396 716,782 1,306,706 2,705,016 2,139,961 7,976,381

Depreciation

Beginning of year - 255,507 157,871 185,406 474,262 - 1,073,046

Charge for the year - 230,774 131,656 254,516 460,557 - 1,077,503

Disposal - - - (4,902) - - (4,902)

End of year - 486,281 289,527 435,020 934,819 - 2,145,647

Net Book Value

End of year 149,520 472,115 427,255 871,686 1,770,197 2,139,961 5,830,734

Beginning of year - 367,708 278,058 765,388 566,702 - 1,977,856




51

10 Short-Term Investments

During the year the major investments of the Trust Fund was on treasury bills and treasurybearer bonds issued by the Bank of Sierra Leone on behalf of the Government. Some fundswere placed on call deposits with the First Discount House Limited.

2005 2004

Le'000 Le'000

SecuritiesTreasury Bearer Bonds 2,146,550 16,709,900Treasury Bills 76,633,950 47,031,000

Call Deposits-Government Pensions 1,660,000 990,000Other Call Deposits 300,200 1,999,997Fixed Deposit 4,000,000 -

-------------- --------------94,740,700 66,730,897

======== ========

11 StocksStationery 37,323 1,655Technology Equipment 3,553 3,553Others (spares for vehicles) - 213

----------- -----------40,876 5,421

======= =======

12 Debtors

Interest receivable 2,650,768 3,244,171Staff Loans and Advances 313,432 216,890

Staff Rent Receivable 17,772 1,429Other receivables 448,476 850,682

----------- -----------

3,430,448 4,313,172

======= =======PrepaymentsInsurance 15,924 46,042Rent 148,403 347,940Others 214,198 213,722

----------- -----------

378,525 607,704

======= =======

Other prepayments represent withholding taxes on interest on treasury bills/bonds and callaccount interest for which there is an intention to apply for waiver from the Sierra LeoneGovernment.




52

13 Creditors2005 2004

Amounts falling due within one year Le'000 Le'000Overseas creditors - 143,809

Audit fees 40,000 33,000Local creditors 29,052 255,801Interest on Treasury Bills/Bonds 3,298,222 4,586,216Sierra Leone Government 963,618 -Others 3,487,819 344,562

-------------- --------------

7,818,711 5,363,388======== ========

14 Cash receipts from customersContributions received 40,666,480 28,891,026

Other operating income 25,832,762 16,474,363Decrease/(increase) in recievables and prepayments 1,111,903 (2,556,912)

Decrease/(increase) in assets transit account 191,636 (40,468)Decrease/(increase) in stocks (35,455) (3,553)

-------------- --------------67,767,326 42,764,456======== ========

15 Cash paid to suppliers and employeesBenefits paid (640,377) (311,274)

General and administrative expenses (14,486,826) (10,690,705)Increase in creditors 2,455,323 2,631,372Depreciation 1,077,503 548,934

-------------- --------------(11,594,377) (7,821,673)

======== ========

16 Cash and Cash EquivalentsCash and cash equivalentsat 1 January

766,093 2,564,300

Net increase/(decrease) in cash and cash equivalents 1,081,697 (1,798,207)======== ========

Cash and cash equivalentsat 31 December 1,847,790 766,093

17 Cash at Bank and in handCash at bank 1,498,248 520,861

Cash in hand 349,542 245,232-------------- --------------1,847,790 766,093======== ========




53

2005 200418 Accumulated Fund Le'000 Le'000

Balance at 1 January 76,626,641 42,263,231Surplus for the year transferred 42,566,780 34,363,410

Prior Year Adjustment (840,713) --------------- --------------

118,352,708 76,626,641======== ========

Prior Year Adjustment represents the overstatement of income by Le840 Million in the 2004Financial Statements now corrected. This resulted in the overstatement of the Accumulated

Fund balance and understatement of Deferred Income by the same amount.

19 Long-term InvestmentsLong-term investments comprised:Acquisition of Land 694,001 597,173

Investment in Sierrablocks Concrete Products Limited 6,591,364 6,590,364Sierrablock Debenture 6,000,000 -Barock Investment 7,268 -Equity Investment 6,400,000 -

-------------- --------------19,692,633 7,187,537======== ========

In a bid to diversify the Trust's investments, land was acquired from different Communities inthe country. Also the Trust agreed to hold sixty percent shares in a Joint Venture with REGI-

MANUEL GRAY(Ghana) LIMITED to form SIERRABLOCKS CONRETE PRODUCTSLIMITED (SCPL).

20 TaxationUnder the provisions of The National Social Security and Insurance Trust Act 2001 whichestablished the Fund, the Trust shall be exempted from stamp duty, and other such taxesand duties as the President may determine.

21 Capital CommitmentsCapital expenditure authorized but not yet expended as at 31 December 2005 amounted

to Le6.8 billion; (2004:Nil)

22 Contingent LiabilitiesThere were no significant contingent liabilities as at 31 December 2005; (2004:Nil).




54

PHOTO NEWS

Members Conference




55

2005 Staff Party




Turning of the Sod - Sierrablock Concrete ProductsFactory

social security: annual%20report 2005

Documents