Current contributors to be exempted from pension changes, says URBRA

 

NSSF boss Richard Byarugaba (L) jubilates with the Fund workers. The company has been a monopoly player in the collection of the 15 per cent mandatory contributions. FILE PHOTO

 

By FARIDAH KULABAKO

Current contributors to the mandatory pension schemes will continue receiving their benefits in accordance with the existing arrangements and not as proposed under the new law, an official has said.

Mr Moses Bekabye, the Uganda Retirement Benefits Regulatory Authority (URBRA) acting chief executive officer said the proposed mode of accessing one’s pension benefits as provided for under the Retirement Benefits Sector Liberalisation Bill, will only apply to employees will start making the mandatory contributions to pension schemes after the law has come into force.

The Retirement Benefits Sector Liberalisation Bill proposes a number of reforms in Uganda’s pension sector including payment of a third of one’s total savings as a lump sum and two thirds as annuity or income drawdown or income arising out of the investments made by the schemes.


Currently, National Social Security Fund (NSSF) which receives the 15 per cent mandatory contributions from private sector employees, pays out contributions in lump sum.

“The new law will not work retrospectively. So it will not change the terms and conditions agreed upon by existing contributors,” he said, adding that the new terms will apply to contributors who will join formal employment in about 20 to 25 years.

Mr Bekabye who was speaking at a function where KCB Uganda received licenses to offer Custody and Trustee services under the liberalised pension environment, however, said high standards of governance will take immediately effect to protect savers’ money.

The URBRA chairman, Mr Andrew Kasirye, said the reforms in the pension sector will also eliminate the five employees and above threshold to include everyone who is in formal employment.

Originally, the law restricted the mandatory contributions to the National Social Security Fund (NSSF) to businesses employing five people and above.


Mr Kasirye further said voluntary pension schemes will also be put in place for self-employed people including those in the informal sector.

Commenting on the licenses, KCB Uganda chairman Samwiri Njuki, said adding custodial and Trustee services to the bank’s product offerings will enable it deliver holistic services to customers.