Business

Pension Trustees must have professional insurance - official

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By FARIDAH KULABAKO

Posted  Thursday, December 19  2013 at  02:00

In Summary

216 trustees have been licensed to take part in the liberalised pension sector.

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ENTEBBE- Entities seeking to undertake trustee services in the liberalised pension sector must have professional indemnity insurance covers to guard them against huge financial losses, the Uganda Retirement Benefits Regulatory Authority (URBRA) interim chief executive officer has said.

Speaking at a business reporters’ retreat in Entebbe recently, Mr Moses Bekabye said the cover help trustees, who will be responsible for making investment decision on behalf of pension schemes under a liberalised pension environment, not to pay huge sums of money as a result of unintentional financial loss.

“We don’t want to scare away trustees but we encourage them to have professional indemnity insurance so that they don’t suffer personally in case of an accidental loss,” Mr Bekabye said.

Trustees will be charged with ensuring the safety of savers’ money by investing it in investment vehicles that guarantee high returns.

So far, 216 trustees have been licensed to take part in the liberalised pension sector, including five corporate and 211 individual trustees.

Currently, National Social Security Fund (NSSF), the national pensions fund has monopoly over the 15 per cent mandatory contributions that employers remit on behalf of their employees as savings.

The current law is also restrictive to businesses employ five workers and above, limiting the scope of pension coverage.

The opening up of the sector will, however, see more players coming on board, something that will bring about competition in the provision of services, increase efficiency and transparency, improve governance and bring about innovative products in the market.

To date, 45 schemes have applied to provide pension scheme services, including NSSF, Uganda Revenue Authority, Monitor Publications, British American Tobacco, Standard Chartered Bank, Bank of Uganda, Tullow, Uganda Communication Commission and Nile Breweries, among others.

Mr Bekabye noted that NSSF did not have enough capacity to exploit the huge pension potential in Uganda, especially in the informal sector, explaining why it covers about 9,000 employees out of the 11 million people in employment.

fkulabako@ug.nationmedia.com