The pension reforms in Uganda will free capital into the hands of the private sector to champion infrastructural development, a key figure from one of the private firms set to benefit from the reforms has intimated.
John Karionji, the CEO of the Insurance Company of East Africa (ICEA) has said these funds will then ultimately drive the growth of the economy aggressively.
“These reforms will offer open funds for investment across many sectors like industry and real estate,” he said.
Karionji added: “Once the private sector picks the management of these funds, they have the knack to pick out high yielding investment areas. This economy will really expand.”
Speaking after the firm’s customer interaction meet in Kampala recently, Karionji also said the liberalization of the pensions schemes will greatly change the dynamics of the services offered.
“The test of whether you are a good fund manager or not will be the return you declare to your pension fund schemes every year,” he said.
Karionji said this competition among pension schemes providers will see the benefits trickle down to the contributors.
“So the competition is now going to be based on who has returned the highest interest on the contributions of employees.”
Reforms in the Uganda’s pension sector are taking shape in two phases.
The first process in the revamping of the pensions sector was the enactment of Uganda Retirements Benefits Regulatory Act assented to by the President in June 2011 and gazette, making it law.
The Retirement Benefits Sector Liberalisation Bill 2011 now awaits the passing of parliament. Upon its passing, the pensions sector will be liberalized and embrace private players, like ICEA.
Analysts have hailed the move that will see employees choose from an array of pension schemes providers that will spark off competition.
These reforms will end NSSF’s dominance of the sector
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