uganda should learn from chilean

EDITOR: The liberalization of the retirement benefits sector, or if you want, the pension fund, was largely informed by and moulded on the Chilean model. In May 1981, Chile took on what the world then saw as a ballsy move, moreover by a socialist country.

The privatisation of social security. The contribution system was to be managed solely by private management pension funds. This model grew rapidly and by February 2005 private pension funds controlled $61b, at the time, more than 55% of Chile’s GDP!

Privatisation of this fund came with its own problems like high operational costs which led to high management fees, discrimination against the poor, misleading rates of return informed by currency speculation, etc. All those issues are likely to affect the Ugandan worker once the pension sector is liberalised.

This expectation of phenomenal profits as is the case with Chile seems to be the reason many governments are fashioning and pushing for privatisation of pension schemes. In Chile, government officials, international agencies and academics are rushing to address the system’s many failures to avert a possible crisis.

And so why is it that even as this is happening, in Uganda, we are still pushing for the pension scheme privatisation continuously citing and glorifying the Chilean success story but ignoring these shortcomings that will no doubt come to haunt us or our children, our children’s children years from now? Who is looking out for the poor man in all of this?

Raffik Kumar