When Parliament returns next month, lawmakers will have to either tackle the pension crisis head-on or continue making excuses that perpetuate the failed status quo that has entrenched exploitation, expanded poverty and theft in the country.
The MPs should cautiously fix the gaps in the pension sector to avert the cloud hanging over the economy.
The Finance Committee is handling the Retirement Benefits Sector Liberalisation Bill, 2011. The Bill seeks among others to liberalise the pension sector targeting the National Social Security Fund (NSSF) and the Public Service Pension Scheme that caters for civil servants. Independent-minded legislators feel the government went too far even as workers claim it was negotiated “behind closed doors,” suggesting they did not have an opportunity to give their views.
While the government is pushing for ‘full liberalisation’, social security experts and workers’ leaders have warned of impending dangers of leaving the workers’ savings in the hands of ‘risk-takers’.
Workers and their leaders have since accused a “racket of crooked officials” in government of plotting to loot their lifetime savings under the guise of pension reforms. They are concerned that they were not consulted on the Bill and that there are ‘vultures’ in government racing to dismantle NSSF and feast on workers savings with impunity. They have threatened to expose the “crooks” and their “collaborators” if Parliament and the Executive refuse to listen.
The disquiet of the workers is that once the Bill is passed into law in its current form, the “speculators” in the market will not be able to provide the social security systems, focusing on basic income in cases of unemployment, illness and injury, old age and retirement, invalidity, family responsibilities such as pregnancy and childcare, and loss of the family breadwinner.
The government is pretty aware of the current social security system dilemma in the country and through Ministry of Finance is showing a lot of political will to get the job done. While it’s not easy to have consensus on all the clauses in the Bill, it’s critical that the government listens to the workers and specialists who are calling for what they have called ‘partial liberalisation’.
In an informal discussion about the proposed reforms, a social security expert told me last year, that the reforms are “moral”, but the “devil” in the Bill is in the detail. He seemed afraid that the government was “opening up too much too fast” and unfortunately, the members of the Finance Committee who are currently looking through the Bill don’t seem to see the dangers. They forget that pulling NSSF to pieces will mean removing the only player that already penetrated the informal sector. The Fund currently has more than 500,000 members.
For instance, two months ago, I attended a Committee meeting to discuss the proposed pension reforms and it was shameful to see lawmakers admitting how they had not yet “internalised” the Bill brought to the House in 2010, those who had ‘perused’ disagreed with the proposal to give NSSF a transition period of five years before the Fund joins other private players in a liberalised market.
Social Security is the system which allows even the lowest paid Ugandan to have some retirement income after clocking retirement age. This is what the Bill should seek to address.
Anyhow, like other public institutions in the country, NSSF is a victim of government’s failure to fight corruption. This has dented the image of this organisation to the extent that the government now thinks that the solution is in the proposed reforms. The destitution of beneficiaries and general worker populace due to, among other things, corrupt practices, delayed benefit packages, poor public perception, and poor governance practices notwithstanding, NSSF has shown that it has the capacity, willingness and ability to safeguard workers money.
Obviously, the liberalisation of the retirement benefits sector will bring about fair competition for mandatory contributions and innovation of products by the licensed retirement benefits schemes but this cannot be achieved if we do not improve efficiency, transparency, governance, and accountability needed to harness the growth potential in the liberalised retirement benefits sector.
Even with the delays and maladministration, we have not seen the government using taxpayers’ money to bail out NSSF when it comes to meeting its obligation. The private scheme that was tried (NIC) had to be bailed out by public funds when it could not repay Makerere University pension funds. Reforms are needed within the pension sector but the new legislation must not take away the advantages of a centralised national mandatory pension scheme.
IN THE HOUSE: Regional Parliament opens
Last week, President Museveni officially opened the 4th meeting of the 2nd session of 3rd East African Legislative Assembly (EALA) in Kampala. He went through the achievement so far and asked the Assembly to end regional conflicts.
When the Assembly opened on Wednesday, the new Chair of Council of Minister, Ms Phyllis Kandie, said as the process of regional integration deepens and widens, there will be moments of anxiety especially on EAC decisions and directives that are perceived to infringe on Partner States’ national sovereignty.
Moving forward, she said: “We must pull our collective strengths together as a community if we are to remain relevant in the fiercely globalized world and not be content with our dwarf status as individual partner states on our own.” This however, will require that partner states cede or pull together part of their sovereignty and place it in trusted regional institutions in order to deliver the promises the founding fathers of the community made to our peoples upon its revival in 2000.