The taskforce mandated to review the Retirement Benefits Sector Liberalisation Bill yesterday made its report public, with recommendations to amend the National Social Security Fund Act (NSSF) Act 1985 rather than repealing it.
While releasing the report in a meeting in Kampala yesterday, the taskforce chairperson, Mr Pius Bigirimana, said the proposed law – that is currently in Parliament – in its current form carries a narrow mandate and would incapacitate NSSF in a liberalised sector which does not enhance the spirit of fair competition.
“The Treasury conceded that the NSSF Act should not be repealed but that it should instead be amended,” said Mr Bigirimana, who is also the permanent secretary Ministry of Gender, Labour and Social Development.
This report comes after union leaders accused Finance ministry last week of trying to rush the Bill through Parliament without a proper consultative process.
The proposed changes, which were presented in a forum that featured Workers MP Sam Lyomoki, Gender minister Mwesigwa Rukutana, workers’ union leaders and other stakeholders, included having the draft law renamed “The Retirement Benefits Reform Bill 2011.”
Among the changes suggested was the establishment of a national scheme that would manage the basic retirement contributions. The scheme would be backed by the government, thereby being a statutory corporation.
The amendment that attracted a flash point between the task force and stakeholders present was the introduction of direct lending by pension schemes. Workers unions voiced their worries over the amendment that stipulated that for a scheme to lend, consultation with the authority was necessitated.
The authority in question is the Uganda Retirement Benefits Regulatory Authority (URBRA), in which they expressed displeasure with its management and demanded a change in its leadership.
“The issue of URBRA is one we shall handle in a different forum. The reforms do not stop here. If need be, we shall reopen the URBRA Act,” said Mr Rukutana, in an attempt to put the matter to rest.
“We presume that the amendments we have agreed on are substantial and recommend that the Ministry of Finance withdraw the Bill from Parliament and incorporate the amendments agreed upon and thereafter re-table it before Cabinet” said Mr Rukutana.
“We are pleased with these amendments. It is better that the NSSF Act be amended rather than repealed. It’s a win-win for everyone,” said Mr Owere Wilson, the secretary general National Organisation of Trade Unions.
Mandatory contributions. The report also proposed that out of the 15 per cent mandatory contributions, 10 per cent be retained by the national scheme and the rest goes to any other scheme of the employee’s choice.
Periodic reviews. It was suggested that these percentage contributions be reviewed after five years and that adjustments be made subject to the performance of the schemes at that time.