Uganda gets two informal pension schemes
Mr David Nyakundi Bonyi, the chief executive officer URBRA
What you need to know:
Only formal sector schemes have been licenced before.
KAMPALA. The Uganda Retirements Benefits Regulatory Authority (URBRA) has branched out and licenced two informal sector retirement schemes.
Kampala City Traders Association (Kacita) which is mainly composed of traders across the city, and Mazima Retirement Plan, which caters for individuals in various work outfits, received their licences in Kampala last week.
For years, Uganda’s pension coverage has been skewed towards the formal sector, specifically through the National Social Security Fund (NSSF), excluding the informal sector, persons who are self-employed and those working in Small and Medium Enterprises (SMEs).
While handing over the licences, the chief executive officer URBRA, Mr David Nyakundi, said: “Previously, the excuse for the self-employed and players in the informal sector was that there were no schemes where they could save for their retirement. Now we have these two schemes and many more will come.”
He noted that as its key mandate of extending coverage of pension funds in Uganda, having more people saving for retirement is welcome.
Currently, URBRA handles about 1.9 million members from the formal sector against the country’s total labour force estimated to be 15 million people.
Receiving their licence to operate from URBRA, Mr Livingstone Mukasa, the chief executive officer Mazima Retirement Plan, said Uganda’s income and life expectancy are on the rise posing a demographic and economic challenge to the country if not addressed.
“On average income is expected to grow to over Shs3.5 million per year, and in just about five years this will propel the country into the middle income bracket.”
Mr Mukasa said for Uganda to ensure that people with decent incomes today do not become paupers when they grow old there should be a robust social security safety scheme.
“One of the solutions to this is to open the mandatory sector and allow other players to compete with National Social Security Fund in the formal sector. But formal jobs are less than 20 per cent compared to the 80 per cent that are taken up by the informal sector,” he noted.
Mazima, launched in March, has more than 300 members registered but with a target of 50,000 in the next three years.
Mr Mukasa said Mazima is unique because it is a community initiative organised as a trustee where everyone can join and save voluntarily.
Currently URBRA has 66 licenced schemes with NSSF being the biggest and mandatory scheme where most employees save for retirement.
