Contradictions cloud pensions liberalization

By David Mugabe

MAJOR contradictions still exist among the major backers of the impending liberalized pensions sector on which model to adapt with the liberalization bill expected on the floor of parliament when the house resumes.

Speaking during one of the last consultative meetings informing the bill, National Social Security Fund (NSSF) senior management proposed that Uganda should follow the Ghanaian model where it is mandatory for workers to contribute to a certain savings scheme.

On the pros of this mandatory defined benefits scheme where legible workers would all contribute a certain percentage to NSSF before opting for a second scheme, Ivan Kyayonka says workers would have more security of their money.

Under NSSF currently, it is the model of the defined mandatory contribution where the contributor gets a statement of their savings as and when they want.

“The risk is with the member not the scheme, if the money is lost, he has no fallback position,” noted Richard Byarugaba, NSSF chief executive.

But Moses Bekabye, acting chief executive of URBRA says this proposal of having 5% of the savings go to NSSF and the rest to another operator is already in the bill but is binding for only five years after which it will be reviewed. The Uganda Retirement Benefits Regulatory Authority (URBRA) is the sector regulator.

Bekabye says it is impossible to have a mandatory scheme embedded in the law because of the mistrusts of past years brought about by pension’s mismanagement. He says there should be more than one NSSF to which contributions are mandatory.