I am not a fan of entrusting my hard earned cash to other people for safe keeping, I have trust issues in regards to money. But of late finding the best retirement saving scheme has taken root on the list of things I have to do before 2014 ends.
A month ago, I attended a talk about the retirement benefit sector in this banana republic Uganda, where I learnt of a debate to privatise the sector and that there was not enough information relied to the public to explain why this was needed and what will happen when it is done.
With such questions presented to me, I was intrigued to find out what are the available retirement benefit sectors in Uganda and how do they work.
Uganda retirement benefits sector was first introduced in 1939 and 1946 respectively; the armed forces pension scheme and the public service pension scheme are the oldest retirement benefit schemes in this country.
Under these schemes, retirees receive a lump sum and monthly payment calculated on the basis of their salary at retirement and length of service (defined benefits). These are all state sponsored schemes.
Then there is the National Social Security Fund where employers and workers are required to contribute a percentage of their salaries in to the scheme (defined contribution). On retirement, members are entitled to a lump sum payment.
There are also private voluntary retirement schemes mainly among families and friends, even villages that cater for each other’s needs on retirement. They systems are not will know as each scheme set up has different rules and guidelines as per members. They face challenges of regulations but many members are making them work.
Presently in Uganda according to Dan Ngabirano, an assistant lecturer, School of Law in Makerere University; 21% of workers are covered under any of the recognized schemes and a significant numbers is not entitled to any form of benefit at retirement. This is a major limitation with the current arrangement.
You see all public pension schemes are funded by the government using internally generated funds and donor monies. In this arrangement is unsustainable in the light of growing improvement in the life expectancy of Ugandans.
With all the above and more, the retirement sector plan in Uganda is faced with huge governance crisis, reports of corruption as in other public and private sectors are rampant leading to loss of workers’ savings.
With money a lot of things can happen, that is why I have money trust issues. What do you think about the retirement sector in Uganda and what is the best scheme?
There is also this; the occupational pension funds which is handled by companies in trust for their employees. They are said to be ‘sitting on over 600 billion Ugshs which many want to them invest but they choose to keep in the safe Treasury bonds and Bank accounts to gain interest’. I think this is a better scheme only the bank hustles with lending your dime and making you money.
I also found out that I can open my own scheme if I can manage to run it under the new law where very many players will be introduced to the public for them to choose who offers the best interest rate and security.