Retirement benefits authority set to adopt risk-based supervision model

KAMPALA

The Uganda Retirement Benefits Regulatory Authority (URBRA) plans to adopt a risk-based model of supervision to increase transparency and accountability as well as ensuring that pension schemes comply with proper governance principles.
This, according to URBRA interim chief executive officer, Mr Moses Bekabye, is because of the complexity of the investment strategies that need stricter governance oversight.
The model, which will enable schemes to optimise resources by concentrating them in higher risk areas, will see boards of trustees incorporate measures that can assess critical risks to their schemes as well as institute measures to ease them, Mr Bekabye said.

While speaking at a public awareness lecture in Kampala on Tuesday, Mr Bekabye said Uganda’s pension sector is faced with transparency and accountability challenges, necessitating a stricter model to protect members’ funds and interests.
“We will do whatever it takes both at policy level and regulatory level to ensure that checks and balances are in place and that members’ funds are protected,” he said, adding that this model will ensure transparency and accountability and build people’s trust in the pension sector.
The new model will require pension schemes trustees and their providers to look at their control environment, their investment policies and even their financial reporting and performance assessment. The risk-based approach is currently being adopted by all regulators in Uganda away from the compliance-based model which seeks to enable regulators increase surveillance and gain a better understanding of the quality of management of funds, some of which have been mismanaged by the National Social Security Fund, the government’s only provident fund.

Sectors which have shifted
The banking industry already shifted to risk-based supervision while Capital Markets and the Insurance Sector also plan to shift soon. The compliance based supervision model, where firms only comply with the “one-size fits all” irrespective of the level of risks, has become outdated.
The risk-based approach is said to increase transparency in the running and management of risks to enable firms be financially strong to withstand shocks and also achieve their fundamental objective of providing returns on investment, among others.

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