Minister says no to NOTU on NSSF

Pension Reform Bill highlights:

• End monopoly of the National Social Security Fund (NSSF)
• Pay monthly pension instead of lump-sum provident on retirement
• Allow those who have saved money for more than 10 years to access 30% of their savings to secure mortgages or loans from any financial institution
• Convert the public service pension scheme from a defined benefit scheme (where no contributions are made by the civil servant) to a defined contribution scheme (where both the government and the civil servants make contributions to the scheme)
• Increase coverage to all formal sector workers (removing the 5+ cap) under the NSSF arrangement. This would expand pension coverage that is currently at 5%, according to the World Bank’s Uganda Economic Update for 2017

Milestones

January 03, 2011: The Retirement Benefits Sector Liberalisation Bill, 2011 tabled

Nov.01 2017:  Planned NOTU strike over reforms in the pension sector

May 01: Date of previous NOTU planned strike that flopped

June 2017: Workers Representatives meet President Museveni

July 03: Minister of Finance and Deputies meet representatives of workers

To date:  Parliamentary Finance Committee scrutinizing Bill for presentation to Parliament for consideration

NOTU wants Bill withdrawn because:

* Parliamentary Committee on Finance has refused to consider workers proposals

* Reforms will not guarantee the security of workers savings

* Reforms will not give a better return on investment

* Reforms will expose workers savings to profiteers

* Private sector pension firms weak, risky over poor corporate governance

* Private pension schemes interested in workers savings

* Want NSSF Act amended instead because it is easier to monitor than several pension funds

Important facts & figures

• NOTU is an umbrella organisation of 1.2 million workers
• Committee has visited Ghana
• Committee is benchmarking Kenya, Malaysia, Nigeria, Chile
• Uganda Law Society wants comprehensive Trusteeship Law before passing pension liberalisation bill
• Uganda Retirement Benefits Regulatory Authority (URBRA) has overall supervision of pension sector
• All managers of mandatory contributions will be required to maintain capital just like banks do
• Pension funds will be kept in licensed banks only
• Pension liberalization will increase saving to 30% of GDP
• Proposal to increase mandatory savings from a total of 15% to 20% with NSSF retaining a combined total of at least 10% of total savings

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