Kampala.
Uganda continues to experience low levels of pension coverage as the majority of the labour force remains uncovered by the various schemes in the country.
According to the Uganda Retirement Benefits Regulatory Authority (URBRA), at least 13 million people out of the total labour force of about 14 million do not have access to pension, which risks bringing poverty in old age. This amount accounts for 89 per cent of the 15.6m labour force in the country.
With the majority of that labour force in the informal sector, access to money after retirement is highly unlikely.
“We have a huge informal sector where a lot of money is generated. It is our interest to extend coverage to these informal sector workers because they also need to save for their old age income,” Mr David Nyakundi Bonyi, the chief executive officer UBRA, said at the release of the 2015 Pension Industry Performance last week.
Coverage
In total, National Social Security Fund (NSSF), the Public Service Pension Scheme, occupational schemes and the Senior Citizens Grant provide coverage for 1.97 million of the total labour force.
The bulk of these are covered under the NSSF, which has almost 600,000 members. URBRA’s task is even far greater if it is to convince more members of the public to join a scheme that would grant them some income once they reach old age.
“The authority has been trying to reach out to the informal sector. We now have two informal schemes, Mazima and Kacita, where members of the public can contribute money on a monthly basis. At the end of the day, it is about how members become creative in making a contribution. What we must understand is that the informal sector is largely complicated,” Mr Bonyi added.
Inactive members
Even within the formal setting, there are individuals who are registered but not active contributors to a pension scheme. For instance, NSSF has 1.573 million registered members but only 38 per cent of those are active.
Performance
The pension sector in terms of investments and returns is dominated by NSSF. According to the 2015 Pension Sector Report, total assets for the sector rose to Shs6.5 trillion in 2015, up from Shs5.2 trillion in 2014.
According to Mr Benjamin Mukiibi, the URBRA senior research and sector development officer, this growth is attributed to a rise in investments especially in government securities and listed companies. The public service pension scheme does not make any investments.
“Public debt securities continue to have the largest share over the years. High demand for public debt securities indicates that the large portion of the funds accumulated in the system is loaned to the public sector. This reduces public sector borrowing costs, however public sector financing could be achieved through increasing the amount of funds transferred from the system to equities and corporate bonds,” he said.
In 2015, returns on government securities were much higher at an average of 20 per cent. Because of their risk-free nature and good return, the investment rose from Shs3 trillion in 2014 to Shs4.2 trillion in 2015.
In fact, the interest income generated during the year also rose to Shs614 billion from Shs522 billion in 2014.
Payments & Assets
Pension schemes also paid out a total of Shs243 billion to several members who had retired, survivors and disability benefits which is a rise of 13.5 per cent from Shs214 billion in 2014.According to the 2015 Pension Sector Report, assets for the sector rose to Shs6.5 trillion, up from Shs5.2 trillion in 2014.
mmuhumuza@ug.nationmedia.com
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