Think long-term when saving for retirement

An old man in Nakapiripirit District. Figures show that only 14 per cent of the population has a retirement saving scheme in Uganda. PHOTO BY ERONIE KAMUKAMA 

In Summary

Long-term investments and saving schemes can save you from retirement woes, Eronie Kamukama writes.

By Eronie Kamukama

Fagil Mandy sank into his fifties while he was still commissioner in the Ministry of Education. At 53, he felt like this age was when he had to retire and so he did. Reminiscing his early life to CBS PEWOSA members on Thursday in Kampala was largely lesson time for the former Kitante Primary School head teacher. Those were years of fetching water, tilling gardens and digging pit latrines for a
fee. That kind of working life gave vision for what his retirement would turn out. He figured he would retire better if his 60th birthday found him out of public service.

“Do not work in public service for too long or even a bank. I was not rich by the time I retired. But the one thing I had cultivated those years was my financial character, the character to save on every penny I received, including on my allowances,” Mr Mandy told PEWOSA members.

Acquire skills
By retirement, the middle-aged man had built his home in Mukono and bought pieces of land in Kyegegwa and Mpara. He went on to start writing practical English workbooks as the first to earn him cash. The self-help books, some on retirement and education hit the market after retirement. His hotels followed and even today, Mr Mandy is still trying to create other income generating activities. He says one cannot generate money in old age without skills.

“I earn more than 60 per cent of my money from public speaking and I think people need to invest in skills,” Mr Mandy says.
For an hour, the lesson poured out from Mr Mandy clearly; young people must work but must abandon their spendthrift character and save for retirement.

“It was important for me to know what I should spend my money on,” he says, “I envisioned my life at 80 years and I did not want to be begging my children for anything. I had to have my own sufficient income,” he says.

Retirement can be a challenging time and Mr Mandy, in his experience has found so from the mistakes many make at retirement. This ranges from failing to invest in a side business, to failing to build productive networks and spending finances on many dependents.

Save
To Uganda Retirement Benefits Regulatory Authority (URBRA), investments such as those in real estate are good before retirement. But contributing regularly to a savings plan alongside your investments will help you be more successful.
However, not many Ugandans in the informal sector are listening. In its study on ‘Attitudes towards saving for retirement,’ the revelation was bothersome.

“Young people told us they had not thought about it. Those working in institutions with saving arrangements said they were part of it because it was in existence. For the middle-aged, some did not know their balances and others said they have too many responsibilities that do not allow them to think about retirement,” Mr Benjamin Mukiibi, director research and sector development at URBRA, says.

Mr Mukiibi says since people have too many tasks that deplete their finances, they have to save in a way. There are 64 licensed savings schemes in the country. Estimates indicate coverage is now at 14 per cent.

To encourage more savings, URBRA licensed two informal sector retirement schemes and after pilot schemes with Mazima Retirement Plan and Kampala City Traders Association provident fund, there are findings.

“One of the challenges is that to get subscribers to these schemes is not easy. Mazima targets every member in informal sector. But they have to do a lot of marketing to bring people in,” Mr Mukiibi says.

With knowledge that workers in the informal sector have low incomes and later on lack regular contribution for those that have joined existing schemes, URBRA is now developing a new framework to help informal sector with its voluntary saving schemes.

“The best way to get them to save is in organised groups because then you do not have to worry about contributions since they already have structures. We draft onto that, they set up a scheme,” Mr Mukiibi said.