It is going to be compulsory for any firm with less than five employees to reemit their retirement savings to pension schemes after the process to open up the sector has been finalised, the authority in charge of private pension has noted.
According to Moses Bekabye, the interim CEO for Uganda Retirements Benefits Regulatory Authority, “even a firm with one or two employees will be obliged to remit their retirement savings.”
At the moment, only companies with five employees and above are obliged to submit retirement benefits of their workers to the National Social Security Fund (NSSF). The difference this time, he said, will be that there would be freedom for a worker to choose a pension scheme where they want their money to be remitted.
Bekabye told The Observer that the authority has already licensed 63 pension schemes and it has identified 120 more. The authority is targeting about 500 to 800 schemes. While presenting to investors in London recently, Finance Minister Maria Kiwanuka said the pension collections from those companies with four employees and below were estimated to reach Shs 347bn annually, translating to Shs 3.47tn in ten years.
She added that if the five-employee threshold is broken, some 265,000 firms would be brought into the contributory net. However, it is the sheer size of the schemes that have had people wondering whether URBRA has the capacity to vet and regulate them against fraud.
Bekabye says the authority remains rigorous while vetting entrants into the industry and they have adopted a risk-based approach to supervision, which will help them avert fraud or any threats. He said at least two firms have been denied licences after they failed to meet the requirements.
Meanwhile, URBRA has started sensitizing Ugandans about the prospects of opening up the sector, with upcountry districts being the main target. Bekabye said they have already visited Gulu and Mbarara.
“We are moving out to the people and we need them to know what it means for them to have social security,” he said.
Recently, former Finance Minister Ezra Suruma released a book where he criticized the process to open up the sector, and said most Ugandans were not even aware of what liberalising the pension industry meant. A parliamentary commitment on social security is expected to complete the process of reviewing the pension liberalisation bill this month. It is expected to be presented to the plenary by the end of this year.
Bekabye revealed that the authority will have its substantive CEO in January. He said the interviews for the top job were finished and a non-Ugandan emerged winner. Sources at URBRA said a Kenyan is set to take the job. He added that the authority had focused on the professional development of the authority.
“Capacity building does not happen overnight. But we have dedicated efforts and resources there,” Bekabye said. “Even the workers we are recruiting, we must get them trained because they don’t understand how the sector works.”
Source : The Observer