Save now to avoid old-age poverty

As Uganda joined the rest of the world yesterday (October 1) to commemorate the International Day of Older Persons, the Uganda Retirement Benefits Regulatory Authority (URBRA) reiterates the message that saving for retirement is the surest way to mitigate the challenges of old-age poverty.  

World over, there is an improvement in life expectancy, thanks to life-prolonging innovations in technology, healthcare, wellness programmes, and changes in lifestyle choices. 

According to a 2019 report by the United Nations Department of Economic and Social Affairs, the number of older persons worldwide is projected to reach more than 1.5 billion in 2050.  

In sub-Saharan Africa, the projected increase in the number of older persons aged 65 or over could grow to 101 million in 2050. Particularly in Uganda, the 2014 national census indicated that the number of older persons aged 60 years and above, grew from 479,043 in 1969 to 1,433,305 in 2014. These numbers continue to swell. 

It is, therefore, important to plan for the ever-growing number of older persons and to address their special needs, which include financial, physical and health constraints. 

This years commemoration of the International Day of Older Persons comes at a time when the world is saddled with the Covid-19 pandemic. It has been repeatedly said by specialists that the elderly, especially those with underlying health conditions, are more vulnerable to Covid-19 infection. 

The economic downturn, loss of jobs, restricted movement, limited access to amenities will have great impact on the older persons in the short-term and the long-term. Added to old-age poverty, the effects of Covid-19 could be extremely devastating for the older persons. 

The current trends and challenges teach us much about saving for retirement and old age. Generally, economic life is quite hard for older persons in Uganda. Some may be eligible for pension having worked in Public Service. Others may be beneficiaries of the SAGE programme. 

Where old age challenges are exacerbated by unforeseen challenges such as Covid-19, retirement saving becomes even more urgent. Apart from setting the stage for a poverty-free old-age, retirement benefits, savings also contribute to the country’s economic growth and stability. The retirement benefits sector has recorded an ever-increasing contribution to the national GDP. 

In 2019, the sector contributed 10.3 per cent to the national GDP. Well-regulated and supervised retirement benefits schemes are the largest institutional investors in Uganda, with a positive impact on Uganda’s financial markets.

Given the current trends, the number of older persons will continue to grow. It is, therefore, important to start saving early in order to attain poverty-free retirement. The vibrant and effectively regulated retirement benefits sector will ensure prudent management and wise investment of funds, resulting in positive returns to all savers.  

URBRA emphasises that citizens save with licenced retirement benefits schemes. To date, there are 67 licenced retirement benefits schemes, 55 segregated supplementary occupational voluntary schemes, 12 umbrella schemes to 168 employers plans, and supplementary voluntary individual schemes. 

Among the schemes supervised by URBRA are the two mandatory schemes established by Acts of Parliament, including National Social Security Fund (NSSF) and Parliamentary Pension Scheme.  

It is also important to increase coverage of the formal sector, extend coverage to the informal sector, where most workers do not have a structured retirement savings system; and to encourage Ugandans to always make additional retirement savings to guard against old-age poverty. 

 Mr Martin A Nsubuga is chief executive officer URBRA.