NSSF opposes pensions liberalisation
Mar 23, 2011
THE National Social Security Fund (NSSF) has opposed the total liberalisation of the pensions sector, saying there was still need for a mandatory government retirement benefits scheme for all employees.
By Cyprian Musoke
and Joyce Namutebi
THE National Social Security Fund (NSSF) has opposed the total liberalisation of the pensions sector, saying there was still need for a mandatory government retirement benefits scheme for all employees.
In their submissions to Parliament over the Retirement Benefits Authority Bill currently before the House, the NSSF board argued that there was need for sufficient state safeguards which private schemes lack.
The Bill seeks to liberalise the pensions sector by providing for a regulatory authority that will oversee the private players. It obliges employers to pay contributions for their employees into any scheme licensed under the Act.
It also obliges all existing retirement benefit schemes (including NSSF) to apply to the Authority for a license within three months of the coming into force of the Act.
“The fund (NSSF) strongly supports the initiative to establish a regulatory authority for the retirement benefits sector. Our concern is that the Bill removes the fund’s statutory monopoly without adequate provision for a smooth transition to liberalisation.
In our view, this will lead to confusion, anarchy and poses risks for the workers savings,†read a statement signed by board chairman Vincent Ssekono.
It cites the case of a famous business man, Robert Maxwell of England, who fraudulently diverted his company’s pension fund to cover company losses and eventually committed suicide, leaving no recourse for his employees.
“Recently, the Government of Uganda had to intervene after National Insurance Corporation failed to pay retirement benefits owed to Makerere University staff. The presence of a regulator alone does not guarantee the security of people’s savings,†Ssekono said.
They gave the examples of Greenland and the Cooperative Bank that collapsed with savers money despite the presence of Bank of Uganda, a regulator.
“The Bill lacks provisions on regulation of transfer of savings by employees from one scheme to another. This should be explicitly provided for lest the sector runs the risks of a run from one scheme to another,†Ssekono said.
Ssekono argued that the Bill empowers the Authority to revoke the license of a retirement benefits scheme including NSSF, yet the NSSF Act says its statutory mandate to operate cannot be revoked by a regulator.
The Bill, Ssekono argued, should be simultaneously debated with amendments to the NSSF Act to address all cross cutting and transitional issues affecting NSSF.
He expressed concern that NSSF shall be required to compete with other licensed schemes, yet its range of benefits is limited by the NSSF Act to five age, withdrawal, invalidity, emigration and survivors benefit.
Ssekono also complained that they, as key players, were not consulted prior to formulation of and presentation of the Bill to Parliament.
and Joyce Namutebi
THE National Social Security Fund (NSSF) has opposed the total liberalisation of the pensions sector, saying there was still need for a mandatory government retirement benefits scheme for all employees.
In their submissions to Parliament over the Retirement Benefits Authority Bill currently before the House, the NSSF board argued that there was need for sufficient state safeguards which private schemes lack.
The Bill seeks to liberalise the pensions sector by providing for a regulatory authority that will oversee the private players. It obliges employers to pay contributions for their employees into any scheme licensed under the Act.
It also obliges all existing retirement benefit schemes (including NSSF) to apply to the Authority for a license within three months of the coming into force of the Act.
“The fund (NSSF) strongly supports the initiative to establish a regulatory authority for the retirement benefits sector. Our concern is that the Bill removes the fund’s statutory monopoly without adequate provision for a smooth transition to liberalisation.
In our view, this will lead to confusion, anarchy and poses risks for the workers savings,†read a statement signed by board chairman Vincent Ssekono.
It cites the case of a famous business man, Robert Maxwell of England, who fraudulently diverted his company’s pension fund to cover company losses and eventually committed suicide, leaving no recourse for his employees.
“Recently, the Government of Uganda had to intervene after National Insurance Corporation failed to pay retirement benefits owed to Makerere University staff. The presence of a regulator alone does not guarantee the security of people’s savings,†Ssekono said.
They gave the examples of Greenland and the Cooperative Bank that collapsed with savers money despite the presence of Bank of Uganda, a regulator.
“The Bill lacks provisions on regulation of transfer of savings by employees from one scheme to another. This should be explicitly provided for lest the sector runs the risks of a run from one scheme to another,†Ssekono said.
Ssekono argued that the Bill empowers the Authority to revoke the license of a retirement benefits scheme including NSSF, yet the NSSF Act says its statutory mandate to operate cannot be revoked by a regulator.
The Bill, Ssekono argued, should be simultaneously debated with amendments to the NSSF Act to address all cross cutting and transitional issues affecting NSSF.
He expressed concern that NSSF shall be required to compete with other licensed schemes, yet its range of benefits is limited by the NSSF Act to five age, withdrawal, invalidity, emigration and survivors benefit.
Ssekono also complained that they, as key players, were not consulted prior to formulation of and presentation of the Bill to Parliament.