2005

OUR MISSION To administer a Social Security Scheme that provides financial security to all employees in Sierra Leone in the form of Old Age Benefits, Invalidity Benefits and Survivors Benefits based on Social Insurance Principles. OUR VISION

Annual Report & Accounts 2005

Annual Report and Accounts

The National Social Security and Insurance Trust will be the centre of excellence providing quality social security protection through promoting a culture of high quality performance among its staff.

We Care

OUR CORE VALUES
RESPECT EXCELLENCE

ACCOUNTABLITY

TEAMWORK

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Annual Report & Accounts 2005

WHERE TO FIND US

HEAD OFFICE 35A Lightfoot Boston Street Freetown Tel: 225365/223814 Email:publicaffairs@nassitsl.org Website: www.nassitsl.org NDB Building 21 Siaka Stevens Street Freetown Tel:222329/228935 East Area Office 2 Sahara Street Kenema Tel: 032-420518 Email: eastregion@nassitsl.org West Area Office Pension House 30 Howe Street Freetown Tel: 292235 Email: westregion@nassitsl.org North Area Office 27A Lady's Mile Makeni Tel: 076 969895 Email: northregion@nassitsl.org South Area office 11 Bojon Street Bo Tel: 032-320260/293 Email: southregion@nassitsl.org

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Annual Report & Accounts 2005

Corporate Data
HEAD OFFICE 35A Lightfoot Boston St e t re Freetown Tel: 225365/220246 Email: publicaffairs@nassitsl.org W ebsite: www.nassitsl.org Auditors PKF Regent House, 12 Wilberforce St e t re Freetown Bankers Bank of Sierra Leone Sierra Leone Commercial Bank Limited Rokel Commercial Bank Limited St andard Chartered Bank Guarantee Trust Bank First International Bank International Commercial Bank Sengu M. Koroma Solicitor/Secretary

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Annual Report & Accounts 2005

CONTENTS
PAGE SUBMISSION LETTER MESSAGE FROM THE CHAIRMAN, BOARD OF TRUSTEES MESSAGE FROM THE DIRECTOR GENERAL BOARD OF TRUSTEES MANAGEMENT TEAM OPERATIONS IN 2005 1.0 REGISTRATION 1.1 Employers 1.2 Insured Persons 2.0 3.0 CONTRIBUTION INCOME BENEFITS PAYMENTS 3.1 Government Pension-in-Payment 3.2 Gratuity, Ex-gratia and Death Payments FINANCIAL PERFORMANCE INVESTMENT PERFORMANCE 5.1 Portfolio Composition by Asset Type 5.2 Changes in Asset Composition 5.3 Income from Investment 5.4 Projects and Real Estate 5.5 Equity Purchase in Financial Institutions HUMAN RESOURCES 6.1 New Organisational Structure 6.2 Staff Training and Development INFORMATION SYSTEMS 6 7 9 11 13 17 17 17 18 19 20 21 21 22 23 23 24 24 25 26 27 27 27 30

4.0 5.0

6.0

7.0

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Annual Report & Accounts 2005
8.0 9.0 ACTUARIAL VALUATION PUBLIC EDUCATION 9.1 Awareness and Perception Survey CUSTOMER SERVICES BI-ANNUAL MEMBERS' CONFERENCE MAJOR ACHIEVEMENTS IN 2005 RISK MANAGEMENT CHALLENGES FACING THE TRUST 31 32 33 34 35 36 37 38 39 40 42 43 44 45 46 54

10.0 11.0 12.0 13.0 14.0

LOOKING TO THE YEAR AHEAD REPORT FROM THE BOARD OF TRUSTEES AUDITORS' REPORT INCOME AND EXPENDITURE ACCOUNTS BALANCE SHEET CASH FLOW STATEMENT NOTES TO THE FINANCIAL STATEMENTS PHOTO NEWS

5

Annual Report & Accounts 2005 SUBMISSION LETTER

Hon. Alpha O. Timbo Minister of Labour, Social Security and Industrial Relations Ministry of Labour, Social Security and Industrial Relations New England Ville Freetown

Honourable Minister, RE: ANNUAL REPORT OF THE NATIONAL SOCIAL SECURITY AND INSURANCE TRUST FOR 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) b) the Trust's Operational performance for the Financial Year 2005; and the audited Financial Accounts for the same period.

I look forward to our continued cooperation.

Yours Sincerely,

………………………………… Andrew Keili Chairman, Board of Trustees

6

Annual Report & Accounts 2005 MESSAGE FROM THE CHAIRMAN, BOARD OF TRUSTEES

O

n behalf of the Board of Trustees of the National Social Security and Insurance Trust, NASSIT, I have the honour to present the Trust's Annual Report for the period 1st January 2005 to 31st December 2005. I am extremely pleased to report that the Trust's performance during the year under review was very impressive in terms of membership, contributions, magnitude of investments and income from investments. The Fund recorded positive growth in all its performance indicators. On the national front, the country's economic performance conMr. Andrew Keili tinued to improve, with an impresChairman, Board of Trustees sive growth rate and good fiscal performance, generally. Increased activities 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 initiatives resulted in increased investment generally in many sectors. Performance indicators improved considerably over 2004. Membership rose from 102,895 in 2004 to 114, 234 in 2005. The total surplus of the Trust grew by 55 percent over the 2004 figure to 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 percent over the 2004 figure. Investment performance was good. A total of Le 114.43 billion was invested, mostly in government securities. The average return on investment at 19.71 percent was considerably above that budgeted. Work was done in formulating 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 and monitoring requirements especially for investments in the infrastructure areas. An Actuarial Valuation as at end of 2004 was completed. The report reaffirms the financial viability of the scheme. The scheme can last for another 20 years without requiring an increase in contribution 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 retirement at age of 55 for the Forces has been accepted by the Board and recommended to government.

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Annual Report & Accounts 2005
A first Members' Conference provided the opportunity for consultation and dialogue between the Trust's management and a wide array of its contributors and other stakeholders to promote mutual understanding of needs and concerns. A well designed training programme has accorded the opportunity 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 challenges. One of the biggest challenges Sierra Leone faces is creating formal sector jobs. NASSIT 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 pertinent by stakeholders, after the lessons learnt during the initial years of the scheme's operation. We also face immense challenges attempting to reform and expand the existing systems in order to improve benefits, extend coverage and achieve greater efficiency and effectiveness. Plans for having a capital market, more varied financial instruments and general attempts by government to remove Administrative barriers to doing business will bode well for the scheme. There are indeed immense opportunities for the growth of the scheme especially with the expansion of the private sector. The successes mentioned would not have been realised and sustained without the support of all stakeholders (the government, employers, employees and NASSIT staff). I therefore wish to pay tribute to the government for nurturing a stable political environment in the country and seriously attempting to engender a favourable and conducive investment climate. Government support in myriad forms will be needed on an incessant basis and we have no doubt that this will continue to be provided. Lastly, I would like to thank fellow Board members for their continued commitment in guiding the affairs of The Trust. My thanks also go to members of senior management and staff for their tenacity, professionalism and their continued commitment to the Trust.

................................................. Andrew Keili Chairman, Board of Trustees

8

Annual Report & Accounts 2005 MESSAGE FROM THE DIRECTOR GENERAL
has been an eventful year for us. A lot was achieved in advancing social security in Sierra Leone through our collective efforts, mutual support and cooperation. During 2005, the staff displayed tremendous enthusiasm and initiative as we strive to widen membership and increase the level of compliance.In 2006, we would, therefore, seek to build on this strong foundation as we strive to strengthen social security in the country with a key focus on information systems, customer services and risk assessment and monitoring.

2005

Information Systems Mr. Edmund Koroma Work on the biometric registration DIRECTOR GENERAL system will commence during 2006 and will be fully integrated with our existing IT Infrastructure. This is aimed at improving service delivery to better serve our members. The existence of a quality information technology is critical for the proper management and flow of data in any social security system. Investments and Projects In 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 be fully operationalised. The Investment and Projects Department is also currently reviewing our investment 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 Image Improving customer satisfaction through efficient service delivery to enhance our corporate image remains an overriding priority for top management. During the year, work will commence on 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 staff and provide a more attractive environment for our members/customers. Risk Monitoring The 2005 Risk Assessment Report has been issued to all staff. All staffs must recognize the risks they 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 Structure In order to better meet the challenges of our objectives set out in the strategic plan and facilitate

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Annual Report & Accounts 2005
the efficient delivery of service, the organizational structure was realigned to enhance our human resource capability. In this financial year, we will continue to implement the new organizational structure focusing on filling the vacancies approved. Human Resources All employees benefited from several programmes which were conducted internally while several benefited from training done externally. Our training programmes focused on customer service, compliance, information technology, benefits, actuarial science and legal. Training on Team Building 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 respective departments/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 possible through your hard work and dedication. To Management, I say thank you for your outstanding performance and your demonstrated commitment. As we start another year, I record our unwavering commitment to channel our energies towards meeting the expectations of our stakeholders fully aware of our role to ensuring greater social protection 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 Social Security and Insurance Trust.

...................................................................... Edmund Koroma DIRECTOR GENERAL

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Annual Report & Accounts 2005

BOARD OF TRUSTEES

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)

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Annual Report & Accounts 2005

BOARD OF TRUSTEES

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)

Mr. Muctarr Williams Representing Sierra Leone Labour Congress (Trustee)

Mr. Felix Rhodes Representing Employers Federation (Trustee)

Mr. Sengu M.Koroma Solicitor/Secretary

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Annual Report & Accounts 2005

MANAGEMENT TEAM

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

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Annual Report & Accounts 2005

MANAGEMENT TEAM

Mr. Mahmoud Idriss Head, Investments & Projects

Mr. Davidson Peters John Chief Manager, Internal Audit

Mrs. Victoria Mansaray Head, Government. Operations

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. Amadu F. Dainkeh Area Manager, North Region

Mr. Idris Turay Area Manager, West Region

Mr. Peter Kenah Head, Public Affairs

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Annual Report & Accounts 2005

MANAGEMENT TEAM

Mr. Sadique Fofanah Head, Benefits Queries and Complaints

Mr. Desmond B. Edwards Head, Prosecutions Unit

Mr. Ishmail Kaetu Yillah Head, Corporate Law

Mr. Brima I.B. Kargbo Ag.Head, Research, Planning & Actuarial

Mr. Edwin Kamara Manager, Benefits

Mr. Foday Koroma Manager, Facilities

Mr. Julius Michael Head, Accounts

Mr. Ahmed B. Kamara Head, Compliance Unit

Mr. Bai E. Tarawalie Ag. Area Manager, East Region

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Annual Report & Accounts 2005

MANAGEMENT TEAM

Mr. Ismail B. Kandeh Ag. Area Manager, South Region

Ms. Dewo Ngombu Ag. Head, Human Resource Development

Mr. Momodu Maligi Head, Customer Service

Mr. Daniel Khanu Manager, Investment & Projects

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Annual Report & Accounts 2005

OPERATIONS IN 2005
1.0 REGISTRATION
1.1 Employers

In 2005, the registration of establishments increased to 2,251 from 1,598 in 2004, an increase of about 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 registered 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 GOVERNMENT PRIVATE INSTITUTIONS West North South East Sub Total TOTAL 10

No. of Employers 2003 2004 18 1,219 52 142 167 1,580 1,598 2005 25 1,647 131 235 213 2,226 2,251

No. of New Employers 2003 8 1,030 1,030 1,038 2004 8 189 52 142 167 550 558 2005 7 428 79 93 46 646 653

1,030 1,030 1,040

The distribution of registered employers by economic sector is shown in Table 2. About 47 percent of registered employers are in the Services Group followed by Wholesale and Retail Trade (37.67 percent).
Table 2: Registered Employers by Economic Sector1 , 2005

Economic Sector Agriculture Wholesale and Retail Trade Transport, Storage and Communication Communication Social/Personal Services, Extra-Territorial Bodies & Household with employed persons Financial Intermediations Hotels & Restaurants Manufacturing Mining & Quarrying Services Construction Electricity, Gas & Water Supply Total
1

Number 19 848 56 34 28 59 52 22 1,047 78 8 2,251

% of Total 0.84 37.67 2.49 1.51 1.23 2.62 2.31 0.98 46.51 3.47 0.36 100.00

Using International Standards of Industrial Classification

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Annual Report & Accounts 2005
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 is about 11,339. About 8,560 are in the private sector, including the self-employed. The number of new 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 to 439 as at end December 2005.
Table 3: Insured Employees by Establishment Type and Region, 2003 - 2005

Region/Department GOVERNMENT PRIVATE INSTITUTIONS West North South East Sub Total TOTAL

No. of Employees 2003 63,359 31,958 31,958 95,317 2004 65,018 33,915 715 1,663 1,571 37,864 102,882 2005 67,800 38,516 2,809 2,441 2,229 45,995 113,795

No. of New Employees 2003 63,359 31,958 31,958 95,317 2004 1,659 1,957 715 1,663 1,571 5,906 7,565 2005 2,782 4,601 2,094 778 658 8,131 10,913

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Annual Report & Accounts 2005 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 20 billion from private sector establishments, including Sub-vented institutions (See Table 4). The significant 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)
2003 GOVERNMENT 17,626,818,134.40 PRIVATE INSTITUTIONS WEST NORTH SOUTH EAST Sub Total TOTAL 12,700,534,214.15 12,700,534,214.15 30,327,352,348.5 n/a 242,343,883.000 n/a n/a 14,674,022,923.03 28,891,026,078.3 18,073,257,549.40 629,164,513.65 1,249,648,172.55 111,099,676.95 20,063,169,912.55 40,667,266,619.81 2004 14,217,003,155.36

ARREARS2 (Le)
2005 2003 2004 2005 6,303,040,138.07

20,604,096,707.26

n/a n/a n/a n/a n/a n/a

n/a n/a n/a n/a n/a n/a

1,700,023,891.81 699,059,105.50 461,720,991.07 402,466,362.09 3,263,270,350.47 9,566,310,488.54

2

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

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Annual Report & Accounts 2005 3.0 BENEFIT PAYMENTS
Benefits payment amounted to about Le 625.8 million in 2005 compared to Le 172.2 million in 2004. Payments for invalidity benefits were made for the first time during 2005. The increase in benefits payments during 2005 reflects an effective benefits uptake strategy adopted by the Fund. 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 TYPE OF BENEFIT RETIREMENT SURVIVORS INVALIDITY TOTAL NO AMOUNT(LE) NO

2004 AMOUNT(LE) NO

2005 AMOUNT(LE) SHARE (%) 87 12 1 100

16 11 27

26,491,801.45 15,041,477.08 41,533,278.53

373 157,967,932.17 19 14,270677.11 -

631 90 11 732

547,024,335.56 73,638,445.48 5,174,270.30 625,837,051.34

392 172,238,609.28

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Annual Report & Accounts 2005
3.1 Government Pension-in- Payment In 2005, government pension processed amounted to Le 6 billion while the amount actually paid is Le 5.7 billion. The total number of beneficiaries was 17, 575.
Table 6: Government Pension in Payment, 2004 - 2005

AREA OFFICE Roll No. East Region North Region South Region West Region Payment by Banks K.I.A - Cash K.I.A - Banks Total 489 589 1,391 10,251 2,241 1,488 19 16,468

2004 Amount(Le) 103,196,452.91 50,281,873.00 300,414,370.30 2,335,830,605.84 1,350,433,618.1 192,670,655.6 2,261,800 4,335,089,375.75 Roll No. 580 574 1,425 11,102 2,439 1,439 16 17,575

2005 Amount(Le) 171,877,184.53 131,675,058.67 425,050,005.35 3,200,011,370.41 1,810,979,177.61 263,939,601.45 2,843,375 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 beneficiaries in this category was 566.

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Annual Report & Accounts 2005 4.0 FINANCIAL PERFORMANCE
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 Le 172.2 million in 2004 to Le 625.8 million in 2005. Government pensions, including gratuity and ex-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 principles and practice and confidence in the national scheme Training in core operational processes and procedures provided to staff including external technical assistance for the installation of and training in NAPOS and other IT software 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 billion from Le 34.4 billion in 2004. Thus, net assets or reserves increased to Le 118.4 billion in 2005 from Le 76.6 billion in 2004.

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Annual Report & Accounts 2005 5.0 INVESTMENT PERFORMANCE
5.1 Portfolio Composition by Asset Type In 2005, short-term fixed income securities constituted 81.08 percent of the total portfolio. The share of equity in the portfolio was 16.60 percent up from 8.9 percent in 2004. A 5-year corporate 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 of operations, no interest was earned on this loan during 2005.

Asset Type

Policy Target. (%) 5 20

Value 2004 Le'000 2,989,997 2,989,997 63,740,900 47,031,000 16,709,900 7,187,537.30 6,590,364.30 6,590,364.30 597,173 158,990 159,200 194,450 84,540 73,918,434.30

Share (%) 4.04 4.04 86.23 63.63 22.61 9.73 8.92 8.92 0.81 0.22 0.22 0.26 0.11 100

Value 2005 Le'000 1,960,200 1,960,200 92,780,500 76,633,950 4,000,000 12,146,550 19,692,632.6 18,998,631.3 6,591,364.30 6,400,000 7,267 6,000,000 694,001.3 158,990 159,200 194,450 84,540 96,821.3 114,433,063

Share (%) 1.71 1.71 81.08 66.97 3.50 10.61 17.21 16.60 5.76 5.59 0.01 5.24 0.61 0.14 0.14 0.17 0.07 0.08 100

Cash Investments Call Deposits Fixed Income Assets Treasury Bills Fixed Deposits Treasury Bearer Bonds Non-fixed Income Assets Equity o/w SCPL RGL (SL) Ltd Barok Project Corporate Debenture Property 0/w Land - Bo Land - Kenema Land - Kono Land - Makeni Capitalised Expenses Total

75 40

35

100

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Annual Report & Accounts 2005
5.2 Changes in Asset Composition Total assets increased to Le 114.43 billion in December 2005 from Le 73.92 billion in December 2004, an increase of 55 percent. The substantial increase in assets during the period is attributable mainly to: (i) the accumulation of surplus contributions due to rising membership; (ii) lower than 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 billion in 2005. Treasury bill holdings increased to Le 76.63 billion in December 2005 from Le 47.03 billion in December 2004, an increase of 63 percent. Holdings of Treasury Bearer Bonds reduced from 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 (%) -34.44 62.94 -27.31 188.27 16.21 54.81

(In Thousands of Leones) Call Deposits Treasury Bills Fixed Deposits Treasury Bearer Bonds Equity Property Total 5.3 Income from Investment 2,989,997 47,031,000 16,709,900 6,590,364 597,173 73,918,434 1,960,200 76,633,950 4,000,000 12,146,550 18,998,362 694,001.3 114,433,063

Total investment income in 2005 amounted to Le 16.9 billion. Investment income was realised mainly from Fixed Income Government Securities. Asset Type Average Return (%) 2003 STFI1 5-Yr Debenture Equity Property Portfolio Returns 16.5 16.5 2004 24.54 n/a 22.77 2005 23.37 19.71 2003 3.94 n/a n/a n/a 3.94 Real Return(%) 2004 9.06 n/a 7.64 2005 8.19 5.95

1

STFI: Short-Term Fixed Income Comprises Call Deposits

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

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Annual Report & Accounts 2005
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 houses for sale. The purchase price for 40 percent of the shares amounted to approximately US $2 Million or its equivalent in Leones. Gouji Property Development Company (SL) Ltd The Board of Trustees also approved the joint venture partnership with Henan Guoji Industry and Development Company, a company based in China involved in real estate development for the formation of the Guoji Property Development Company (SL) Limited. The company is registered with an authorised share capital of US$ 10 Million. The Trust acquired 30 percent of the company's equity. The project design is being planned to commence works in 2006.

ii)

Iii) Progress on the Construction of the Sierrablock Concrete Products Factory The start-up operations of the Sierrablock Concrete Products Ltd experienced significant delays. The delays resulted from late delivery of machinery and equipments for the construction of the factory.

Construction work in progress Commercial production should commence by September 2006.

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Annual Report & Accounts 2005
5.5 i) Equity Purchase in Financial Institutions Ecobank Transnational Corporation The Board of Trustees approved the purchase of shares worth US $ 1.0 Million in Ecobank International, the equivalent of 952,380 shares. The aim is to facilitate the establishment of a branch of the bank in Sierra Leone as part of national efforts to deepen the financial sector in the country. 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 National Development Bank and Rokel Commercial Bank. The Trust has held negotiations with the NCP on the purchase transaction for the NBD.

ii)

26

Annual Report & Accounts 2005 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 percent female are in the management cadre. Table 10 provides the breakdown of staff by management and cadre levels.
Table 10: Staff Distribution by Sex & Level, 2005

CATEGORY Executive Senior Management Middle Management Senior Support Intermediate Support Junior Support TOTAL

MALE No 7 12 10 69 20 38 156 % of Total 3.2 5.5 4.6 31.4 9.1 17.3 70.91

FEMALE No 1 2 8 15 39 65 % of Total 0.5 0.9 3.6 6.8 17.3 29.09 TOTAL 8 14 18 83 59 38 220

6.1 New Organisational Structure In 2005, the Board carried out a careful assessment of the structure of management. The assessment 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 is consistent with best practise in the operations of social security administration. It will enhance the attainment of objectives as well as increase accountabilities it will also facilitate transparency 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 tool in facilitating the systematic review of the attainment of organisational targets set out in the strategic plan as well as assessing individual staff performance. Our approach to Performance Management includes: a) Formal evaluation of performance through appraisal which set targets, reviews achievement against targets, sets new targets and identifies learning and development and a plan for meeting them; Ongoing structure and systematic reviews of progress against targets; and Continuous feedback which acknowledges both success and addresses problems/bottlenecks.

b) c)

6.2 Staff Training and Development The Board recognises that achieving the targets set out in the strategic plan would require a continuous upgrading of the technical competences and personal skills of our staff. To this end, a

27

Annual Report & Accounts 2005
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: NAPOS The training of the users of NAPOS was conducted in June 2005. The training covered the concepts and features of the NAPOS system and the principles, concepts and operational procedures 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 to provided training to staff on operational procedures including compliance monitoring and benefits 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 provided guidelines in the preparation of a Quality Management Manual which should subsequently result in 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 May 2005. The team also undertook an initial assessment of the policy and operational issues facing contractual savings and old age income protection in Sierra Leone, particularly for NASSIT. Customer Care FJP, a management consulting firm, provided training to 89 Staff of all levels in customer service with a view to enhancing workforce attributes and improving communication. The objective is to meet customer requirements and strive to exceed their expectations. Further training is planned for all new staff. Training in Actuarial Science The Head, Research, Planning and Actuarial, Mr. Andrew Allieu, proceeded to Switzerland to pursue 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 Tanzania Several 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. A cross section of the Board of Trustees also visited NSSF during the period. Study Tours to SSNIT Ghana Several members of Management visited the Social Security and National Insurance Trust of Ghana to acquaint themselves with social security operational procedures including prosecution of delinquent institution.

28

Annual Report & Accounts 2005
International Conference on Investment of Social Security Funds, Merida Mexico The Director General, Mr. Edmund Koroma, the Head, Investment and Projects, Mr. Mahmoud Idriss, the Head Treasury Management, Ms. Fatmata Sesay and Quality Assurance and Technical Assistant, Ms. Euniece During attended this conference. Launching of the Social Health Insurance Scheme Benefits - Tanzania Mr. Gibril Saccoh, the Deputy Director General, MFST, attended the launching of the above scheme in Tanzania in July 2005. ISSA IT Seminar in Moscow Mr 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, Tanzania The chairman, Board of Trustees, Dr. J A L Kamara, Head, Research, Planning and Actuarial Department, Mr. Andrew M Allieu and Head, Investment and Projects, Mr Mahmoud Idriss attended the above mentioned ISSA Training Programme. Internet Security - Kofi Annan Centre for Excellence Two staff from the Systems and Technology Division attended the Enterprise IT System Security Workshop in Ghana. Audit Seminar in New York Two senior management staff from the Internal Audit Department attended the above audit training 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.

29

Annual Report & Accounts 2005 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, an information system architecture that will help in the development and delivery of social security has been put in place. Currently, our information system includes member registration, contribution accounting, contribution management, benefit processing and payment, provision of individual social security members' statement and social security cards. Local area networks have been implemented in all our offices. A Wide Area Network (WAN) has been introduced to ensure complete and accurate data entry, retrieval and processing in real time. The WAN facilitated the streamlining of procedures 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 implemented, 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 the scheme will be re-issued with an ID card with the social security number. The base design of this card 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 repository could support all the Trust's core business activities, reduced duplication of stored data and costs to the contributor, and decrease fraudulent claims. It also ensures that the information common to different benefits only needs to be capture once.

30

Annual Report & Accounts 2005 8.0 ACTUARIAL VALUATION
In line with Subsection (1) of Section 47 of the NASSIT Act, the first actuarial review of the Trust took place during the review period. The actuarial valuation is the fundamental test of the financial viability of the Scheme. The external actuarial consultant, Georges Langis, visited Freetown during October 2005 to conduct assessments, collect relevant data and held consultations with several key stakeholders. The results was made public earlier in 2006.

31

Annual Report & Accounts 2005 9.0 PUBLIC 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 proactive, rigorous and aggressive sensitization campaign covering the entire country. The services of major radio stations (UNAMSIL, FM 98.1, KISS 104 FM, Eastern Community Radio) as well as TV stations across the country are being utilised to feature weekly sensitization messages as well as the hosting of panel discussions. These radio and television programmes provided a forum where members and potential members are sensitized on the Scheme. Face-to-face sensitizations were also conducted in about 589 institutions countrywide.

Public education at the Sierra Rutile mining site, Mobimbi.

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

One of the NASSIT billboards located around the country

32

Annual Report & Accounts 2005
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 on the operations. The evidence from the survey suggests a significant level of awareness of the National Social Security Scheme and certain aspects of its activities. The results reveal an awareness level/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 mandate 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 will seek to improve these ratings by ensuring that the objectives of the organization are continuously linked to customer needs and expectations.

33

Annual Report & Accounts 2005 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 is maintained in all the Area Offices. The complaints register documents, monitor and record feedbacks on customer complaints. To this end, Counter Benefit Officers and Customer Relations Officers have been appointed in all 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.

34

Annual Report & Accounts 2005 11.0 BI-ANNUAL 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 objective of the conference was to open up information on the activities of the Trust to our respected members. Two International experts on Social Security were in attendance and made presentations on regional 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 the participants during the second day of the Conference.

35

Annual Report & Accounts 2005 12.0 MAJOR 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 end December 2005, an increase of 11 percent; 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; contribution income in 2004 was Le 28.89 billion and amounted to Le 40.6 billion in 2005, an increase of 41 percent; Scheme benefit payments amounted to Le 625.8 million as at end December 2005 compared to Le 172.2 million in 2004; the number of beneficiaries of Scheme benefit payments were 732 in 2005 compared to 392 in 2004; investment income in 2004 was Le 11.3 billion compared to Le 16.9 billion as at end December 2005;and total accumulated reserve have increased from Le 76.62 billion as at end 2004 to Le118.4 billion as at end 2005.

b.

c.

d.

e.

f.

g.

36

Annual Report & Accounts 2005 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 of risks to which the institution is exposed. The benefits and opportunities of risk management are viewed 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 outlines the need for effective Corporate Governance through a sound corporate Business risk management. The revised framework emphasizes risk assessment as a continuous and developing process central to the institution's strategy as well as the implementation of that strategy. The continual assessment work will be undertaken primarily through a self assessment process with reviews 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. Overall implementation of the Risk Management Strategy is monitored by the Risk Management Committee. The Head of Internal Audit is appointed as the Chief Risk Officer, supported by Risk Coordinators drawn from Senior Management. A risk register has been established on which a record of all risks, together with impact assessments and details of control mechanisms are kept. Managers will ensure that any training and development needs identified in the Risk Register are incorporated into the Trust's annual training programmes.

37

Annual Report & Accounts 2005 14.0 CHALLENGES FACING THE TRUST

Despite the achievements indicated above, the social security institution faces numerous challenges, 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 are building 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 formal sector and informal sector workers. Social security contingencies like medical care, employment injury, funeral and maternity grants are also potential products that can be marketed. The continuing expansion in economic activities may increase the demand for these other social security 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 employers perceive contributions to NASSIT as additional costs given their objective to maximize profits. We are innovating ways to address these challenges in the years ahead.

38

Annual Report & Accounts 2005 LOOKING TO THE YEAR AHEAD 2006
In the year ahead, we look forward to building on our strengths; addressing our weaknesses; rising 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 area of 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 (Actuals) 2006 (Projections)

o o o o

MEMBERSHIP3 Formal sector - coverage ratio (%) Formal Public (No.) Formal Private(No.) Self Employed (No.)

58 68,703 46, 411 439

62.5 70,360 52,497 350

COMPLIANCE RATE (%) o Formal Public (Government) o Formal Private Sector PROCESSING AND PAYMENT OF BENEFITS Average claim handing time(No. of Days) 4 o Old age o Invalidity o Survivor ISSUANCE OF SS CARDS AND MEMBERS' STATEMENT o SS Cards (No. of days) o Members' Statement (No. of days) INVESTMENT PERFOMANCE Rates of Return (%) o Average o/w Short-Term Fixed Income Equity o Real

85 60

80 65

20 60 25

15 25 15

30 45

20 5(upon request)

16 23.37 8.19

15.06 18.10 3.91

Total Formal Public Employment is estimated at 82,482 and Formal Private Employment is 113,386 - Source: Employment and Time spent on Activities in Sierra Leone 4 The number of days is measured from the date of receipt of completed application form by the counter benefit officer.

3

39

Annual Report & Accounts 2005 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 suitable accounting policies have been applied consistently and reasonably and prudent judgments and estimates made.

Statement of the Trustees' Responsibilities The Board of Trustees is required to prepare financial statements for each financial year that give a true and fair view of the state of affairs of the Trust and of the Income and Expenditure of the Trust for the year. In preparing those financial statements, the Board of Trustees are required to: a) b) c) Select suitable accounting policies and then apply them consistently; Make judgments and estimates that are reasonable and prudent; and State whether applicable accounting standards have been followed, subject to any material departures and explained in the financial statements.

The Board of Trustees is responsible for keeping proper accounting records which disclose with reasonable 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 Security and Insurance Trust Act. They are responsible for safeguarding the assets of the Trust and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Contributions and Membership During the financial year ended 31st December 2005, the contributing membership stood at 114,234 employees. Of these, 67,800 are Government employees and 46,434 are private sector employees. The number of institutions registered with the scheme is 2,251.

Benefits A 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.

Reserves The income surplus for the year ended 31st December 2005 amounted to Le 42.6 billion. The accumulated reserves for the period amounted to Le 118.4 billion.

Investment In 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 fixed income securities. Income received from investment for the year amounted to Le 16.9 Billion.

40

Annual Report & Accounts 2005
The composition of the portfolio is shown below:

Value Le 000 94,740,700 18,998,632 694,001

Holding (%) 83 16 1

Government Securities and Call Accounts Equity Property

BY ORDER OF THE BOARD:

Mr. Andrew Keili Chairman, Board of Trustee

Mrs. Gladys Strasser-King Trustee

41

Annual Report & Accounts 2005

AUDITORS' REPORT
NATIONAL SOCIAL SECURITY AND INSURANCE TRUST REPORT 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 on pages 43 to 53 which have been prepared in accordance with the accounting policies set out on pages 46 to 48.

Respective Responsibilities of Directors and Auditors The Trustees of the Board are responsible for the preparation of the financial statements of the Social Security Pensions Scheme. It is our responsibility to form an independent opinion, based on 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 audit includes 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 judgements made by the Trustees in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Trust's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence that the financial statements are in agreement with the books of account kept by the Trust and to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion In our opinion the financial statements give a true and correct view of the state of the Trust as at 31 December 2005 and of the disposition at that date of its assets and liabilities and have been properly prepared in accordance with the Sierra Leone Companies Act Cap 249 and the National Social Security and Insurance Trust Act 2001.

Freetown 2006

Chartered Accountants

42

Annual Report & Accounts 2005 NATIONAL SOCIAL SECURITY AND INSURANCE TRUST
Income and Expenditure Account For the year ended 31 December 2005

2005 Notes Income Contributions received 2 40,666,480 Le' 000

2004 Le' 000

28,891,026

Investment income

3

16,945,061

11,328,204

Sierra Leone Government Receipts Other income

4 5

8,859,835 27,866 ------------66,499,242 -------------

5,137,011 9,148 ------------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

Surplus transferred to Accumulated Fund

14,486,826 ------------23,932,462 ------------42,566,780 ========

6,925,857 ------------11,001,979 ------------34,363,410 ========

43

Annual Report & Accounts 2005 NATIONAL SOCIAL SECURITY AND INSURANCE TRUST
Balance Sheet As at 31 December 2005

Notes

2005 Le'000

2004 Le'000

Long Term Investment Fixed Assets Tangible assets Current Assets Short term investments Stocks Assets transit account Debtors and prepayments Cash at Bank and in hand

19

19,692,633

7,187,537

9

5,830,734

1,977,856

10 11 12 17

94,740,700 40,876 209,713 3,808,973 1,847,790 -------------100,648,052

66,730,897 5,421 401,349 4,920,876 766,093 ------------72,824,636

Creditors: amounts falling due within one year

13

(7,818,711) -------------92,829,341 -------------

(5,363,388) ------------67,461,248 ------------76,626,641 ========

Net current assets

Total assets less current liabilities

118,352,708 ========

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

Approved on behalf of the Board of Trustees

44

Annual Report & Accounts 2005 NATIONAL SOCIAL SECURITY AND INSURANCE TRUST
Cash Flow Statement For the year ended 31 December 2005

Notes Operating activities Cash reciepts from customers Cash paid to suppliers and employees Cash Paid to Government of SL Net cash inflow from operating activities 14 15

2005 Le'000

2004 Le'000

67,767,326 (11,594,377) (9,651,004) --------------46,521,945 ---------------

42,764,456 (7,821,673) (2,089,735) --------------32,853,048 ---------------

Investing activities Debenture Barock Investment Acquisition of plant and equipment Acquisition of short term investments Acquisition of Land Sierrablock Project Equity Investment Proceeds on disposal of Motor Vehicle (6,000,000) (7,268) (5,023,514) (28,009,803) (96,828) (1,000) (6,400,000) 98,165 --------------(45,440,248) --------------(1,478,701) (25,985,017) (597,173) (6,590,364) --------------(34,651,255) ---------------

8 10

Net cash outflow from investing activities

Net increase/(decrease) in cash and cash equivalents

16

1,081,697 =========

(1,798,207) =========

45

Annual Report & Accounts 2005 NATIONAL SOCIAL SECURITY AND INSURANCE TRUST
Notes to the Financial Statements For the year ended 31 December 2005

1

Accounting Policies

The principal accounting policies adopted by the Trust in the preparation of the financial statements are as follows: (a) Basis of Accounting The Financial Statements are prepared in accordance with the historical cost convention and standard pension accounting practice. Contributions Contributions are accounted for on cash basis. An accrual basis of accounting is not considered appropriate as it would result in substantial debtors accounts which may not be recoverd. The contribution rates are stipulated in the Social Security Act of 2001 and are as follows: Employee's contribution Employer's contribution 5% of Earnings 10% of Earnings

(b)

The Government pays an additional contribution at the rate of 2.5% of Civil Service payroll for 20 years for crediting past service. (c) Investment Income Investment securities are basically debt securities which the Trust intends to hold until maturity and are stated at nominal value. Interest earned on investment securities are reported as interest income as they fall due. 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 an actuarial valuation be done every 3 years within the first 10 years of operations, and every 5 years thereafter. In compliance with the provisions of the Act, an actuarial valuation was done as at 31 December2004 by Regie des rentes du Quebec. The opinion of the actuary is that the scheme is financially sound.

(d)

46

Annual Report & Accounts 2005
e) Fixed Assets and Depreciation Equipment, motor vehicles, furniture and fixtures and computer/software are stated at cost less accumulated depreciation.

Depreciation is calculated to write off the cost or valuation of the assets in equal annual instalments on the following basis: Equipment Motor vehicles Furniture and Fixtures Computer hardware and software 33.3% 20% 20% 33.3%

47

Annual Report & Accounts 2005 NATIONAL SOCIAL SECURITY AND INSURANCE TRUST
Notes to the Financial Statements For the year ended 31 December 2005

1

2

Stocks These stocks which are non-trading in nature are valued at the lower of cost and net realisable value. Cost includes all direct expenditure incurred in bringing the items to their present location. 2005 2004 Le'000 Le'000 Contributions Sierra Leone Government Employees 20,604,097 14,217,003 Purchase of credit 16,512 Others 20,045,871 14,674,023 -------------------------40,666,480 28,891,026 ======== ======== Investment Income Investment income represented interest received on short-term investments. Sierra Leone Government Receipts Sierra Leone Government administrative cost Sierra Leone Government pensions in payment Sierra Leone Government gratuity payment 444,860 5,716,416 2,698,559 ------------8,859,835 ======== 518,667 4,618,344 -------------5,137,011 ========

3

4

5

Other Income Other income includes interest on staff loans and profit on disposal of a motor vehicle. Benefits paid During the year ended 31 December 2005, benefits amounting to Le640,377,000 were paid as follows: Contributions Returned Voluntary Retirement Retirement Grant Survivors' Grant Invalidity Grant 14,541 547,024 73,638 5,174 ------------640,377 ======== 139,035 4,669 153,299 14,271 -------------311,274 ========

6

48

Annual Report & Accounts 2005
2005 Le'000 7 Sierra Leone Government Payments Sierra Leone Government benefits payment expenses 182,074 Sierra Leone Government pensions in payment 5,716,416 Sierra Leone Government gratuity payment 2,656,737 Sierra Leone Government pensions expenses 250,032 ------------8,805,259 ======== 2004 Le'000

3,764,848 -------------3,764,848 ========

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

2005 Le'000 8 General and Administrative expenses Directors fees and allowances Depreciation Staff costs Provision for Audit fees General expenses 334,002 1,077,503 5,111,183 40,000 7,924,138 ------------14,486,826 ========

2004 Le'000 188,098 548,953 3,996,847 33,000 2,158,959 ------------6,925,857 ========

49

Annual Report & Accounts 2005
9 Fixed Assets
Furniture Land and Buildings Le'000 Cost Beginning of year Purchases during the year Disposal 149,520 623,215 335,181 435,929 280,853 950,794 453,947 (98,035) 1,040,964 1,664,052 2,139,961 3,050,902 5,023,514 (98,035) Equipment Le'000 and Fixtures Le'000 Motor Vehicles Le'000 Computer/ Software Le'000 Work in progress Le'000 Total Le'000

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 Charge for the year Disposal 255,507 230,774 157,871 131,656 185,406 254,516 (4,902) 474,262 460,557 1,073,046 1,077,503 (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

50

Annual Report & Accounts 2005
10 Short-Term Investments During the year the major investments of the Trust Fund was on treasury bills and treasury bearer bonds issued by the Bank of Sierra Leone on behalf of the Government. Some funds were placed on call deposits with the First Discount House Limited.

2005 Le'000 Securities Treasury Bearer Bonds Treasury Bills Call Deposits-Government Pensions Other Call Deposits Fixed Deposit 2,146,550 76,633,950 1,660,000 300,200 4,000,000 -------------94,740,700 ======== 37,323 3,553 ----------40,876 ======= 2,650,768 313,432 17,772 448,476 ----------3,430,448 ======= 15,924 148,403 214,198 ----------378,525 =======

2004 Le'000 16,709,900 47,031,000 990,000 1,999,997 -------------66,730,897 ======== 1,655 3,553 213 ----------5,421 ======= 3,244,171 216,890 1,429 850,682 ----------4,313,172 ======= 46,042 347,940 213,722 ----------607,704 =======

11

Stocks Stationery Technology Equipment Others (spares for vehicles)

12

Debtors Interest receivable Staff Loans and Advances Staff Rent Receivable Other receivables

Prepayments Insurance Rent Others

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

51

Annual Report & Accounts 2005
13 Creditors Amounts falling due within one year Overseas creditors Audit fees Local creditors Interest on Treasury Bills/Bonds Sierra Leone Government Others 2005 Le'000 40,000 29,052 3,298,222 963,618 3,487,819 -------------7,818,711 ======== 2004 Le'000 143,809 33,000 255,801 4,586,216 344,562 -------------5,363,388 ========

14 Cash receipts from customers Contributions received 40,666,480 Other operating income 25,832,762 Decrease/(increase) in recievables and prepayments 1,111,903 Decrease/(increase) in assets transit account 191,636 Decrease/(increase) in stocks (35,455) -------------67,767,326 ======== 15 Cash paid to suppliers and employees Benefits paid (640,377) General and administrative expenses (14,486,826) Increase in creditors 2,455,323 Depreciation 1,077,503 -------------(11,594,377) ======== 16 Cash and Cash Equivalents Cash and cash equivalents at 1 January 766,093

28,891,026 16,474,363 (2,556,912) (40,468) (3,553) -------------42,764,456 ======== (311,274) (10,690,705) 2,631,372 548,934 -------------(7,821,673) ========

2,564,300

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

======== Cash and cash equivalents at 31 December 1,847,790

(1,798,207) ======== 766,093

17

Cash at Bank and in hand Cash at bank Cash in hand

1,498,248 349,542 -------------1,847,790 ========

520,861 245,232 -------------766,093 ========

52

Annual Report & Accounts 2005
18 Accumulated Fund Balance at 1 January Surplus for the year transferred Prior Year Adjustment 2005 Le'000 76,626,641 42,566,780 (840,713) -------------118,352,708 ======== 2004 Le'000 42,263,231 34,363,410 -------------76,626,641 ========

Prior Year Adjustment represents the overstatement of income by Le840 Million in the 2004 Financial 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 Investments Long-term investments comprised: Acquisition of Land
Investment in Sierrablocks Concrete Products Limited

Sierrablock Debenture Barock Investment Equity Investment

694,001 6,591,364 6,000,000 7,268 6,400,000 -------------19,692,633 ========

597,173 6,590,364 -------------7,187,537 ========

In a bid to diversify the Trust's investments, land was acquired from different Communities in the country. Also the Trust agreed to hold sixty percent shares in a Joint Venture with REGIMANUEL GRAY(Ghana) LIMITED to form SIERRABLOCKS CONRETE PRODUCTS LIMITED (SCPL). 20 Taxation Under the provisions of The National Social Security and Insurance Trust Act 2001 which established the Fund, the Trust shall be exempted from stamp duty, and other such taxes and duties as the President may determine. Capital Commitments Capital expenditure authorized but not yet expended as at 31 December 2005 amounted to Le6.8 billion; (2004:Nil) Contingent Liabilities There were no significant contingent liabilities as at 31 December 2005; (2004:Nil).

21

22

53

Annual Report & Accounts 2005

PHOTO NEWS
Member s Conference

54

Annual Report & Accounts 2005

2005 Staff Party

55

Annual Report & Accounts 2005

Turning of the Sod - Sierrablock Concrete Products Factory

56