Age is nothing but a number

• By Oscar Kabbatende

Oscar Kabbatende

THERE is something rather unnerving about foreign media outlets breaking stories on Rwanda. This week, one regional newspaper published alarming news for any worker approaching the age of retirement. The Rwanda Social Security Board [RSSB] is contemplating raising the minimum age for early retirement from 55 to 60 years as well as creating a ceiling on how much can be paid out to pensioners.

RSSB cited the rise of Rwanda’s life expectancy had risen to 55 years as a reason for the first proposal. In other words, economic development and Ministry of Health programmes had created a situation where the average Rwandan lived for at least 55 years. The proposed increase in the minimum age for early retirement to 60 is a cynical move by RSSB to make sure many of the would-be early pensioners are dead before they can claim their benefits. Naturally, RSSB did not put it in these terms. They preferred to raise the specter of a graying population. A curious assumption given that most of Rwanda is less than 20 years old. This threat will not materialise before the next 35 years are up and then only if the birth rate drops. RSSB’s problems can only start around 2050.

RSSB’s second proposal – creating a ceiling for pension payouts was presented as a drive for social equity. To hear it, some were getting paid too much in their working lives and they’re still getting paid too much as retirees.

The RSSB seems to be of the opinion that these high-earners should be brought down a little so that the lower earners feel better about themselves. Apart from being unfashionably socialist, it is also insincere. High-earners pay larger amounts in social security contributions, why should the RSSB punish their largest contributors for their affluence?

By creating a ceiling, it is inviting a situation where salaries are under-reported and the wealthier move to private pension schemes that promise pension payouts commiserate with their earnings. This would lead to a drop in the amounts contributed in social security and a situation where RSSB became the pension plan of the lower earners. An ironic situation given their pretensions to equity.

The real reason is that the RSSB wants to retain as much of the contributions as possible. The article even hinted at an increase in social security contributions. This tendency is not unique to RSSB, its common to many social security organisations worldwide.

It will be interesting to see whether Parliament will pass these proposals in the new pension law knowing that many of the Deputies and Senators are close to 55 but will now have to wait another 5 years and then possibly be subject to a capped maximum that is not commensurate to what they were earning prior to retirement. Personal interest collides with the profitability of RSSB and there can only be one winner.