New system to grant civil servants early pension benefits

Malaba Town Council tax collectors at work. PHOTO BY MONITOR REPORTER 

By  Stephen Otage
 

 

In Summary

The new system will allow pension administrators to calculate one’s benefits monthly

Faced with mounting fraud, the government is designing a new public service pension system where pensioners will receive up to about three quarters of their savings monthly while working.

The management of pension money in the country has been dogged with corruption scandals involving workers’ savings; the biggest scandals having taken place in the National Social Security Fund (NSSF), National Insurance Corporation and the Public Service Pensions Scheme.

The new system will allow pension administrators to calculate one’s benefits monthly and disburse them like a salary contrary to receiving full pension after retiring.

“We shall be paying a lump sum say 30 per cent while the 70 per cent will be paid out on a monthly basis with its interest,” Mr Andrew Kasirye, the chairman of Uganda Retirements Benefit Regulatory Authority (URBRA), said.

The system which is similar to that of the NSSF, is meant to build a trusted public service pensions scheme to manage pension funds for civil servants.

Under the new system, the ministry of Public Service will appoint a board of trustees comprising of members who have been thoroughly vetted to supervise its pension scheme while the pensioners’ money will no longer be held by the Ministry of Finance but a reputable administrator preferably a bank with insured financial reserves.

Speaking at a training workshop for human resource managers and pension fund managers last week, Mr Kasirye said the new approach is in line URBRA mandate of regulating the establishment, operation, management and supervision of institutions that provide retirement benefit products and services.
Studies have shown that the current lump sum payment system does not offer returns on investments.

“You find an old man who has saved Shs60 million going to buy a minibus for business which the driver will crush, two boda bodas which will be stolen and land which he will not develop because the money is finished. What kind of business is this?” he wondered.