The Chief Executive Officer of Uganda Retirement benefits Regulatory Authority (URBRA), David Nyakundi Bonyi, says reforms in the pension sector would significantly boost participation of informally employed Ugandans in the sector.
Speaking in an interview with Uganda Radio Network, Bonyi says informal sector workers have for long been excluded from pensions schemes simply because there is no enabling legal and regulatory framework to involve them.
Bonyi says the Retirement Benefits Sector Liberalisation Bill, 2011, if passed would open up the pension sector who constitute about 80 percent of workers.
Presently, only the formally employed in both the private and public sectors have, by law, the framework for having a pension scheme. Formal private sector workers save under the National Social Security Fund (NSSF) while civil servants are entitled to pension provided by the government.
Initially, government wanted the bill to, among others, repeal the NSSF and Pension acts, but has since backtracked, preferring to retain both acts and come up with an additional one dealing with a number of reforms including creation of informal schemes.
URBRA, although not yet fully mandated to oversee informal schemes went out of its way and has since licensed two informal pension schemes – Mazima and Kacita.
Bonyi says with the new law URBRA will be able to create the enabling frameworks for the licensing and operation of as many informal schemes as possible. He says the informal nature of employment also means the informal pension schemes have to be voluntary but with clear entry and exit procedures.
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According to Bonyi, informal schemes also have to be simpler to reflect the nature of the informal sector.
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Bonyi also said there is a need to provide a number of incentives and innovations in order to attract as many informal pension schemes as possible.
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The pension sector is estimated to be holding over 20 trillion shillings, 7.5 trillion shillings by NSSF alone. Other schemes are run by government agencies.
While releasing a report on financing infrastructure development in Uganda Thursday, Economic Policy Research Centre researcher, Dr. Ezra Munyambonera, proposed that Uganda should look inwards, including at the pension sector, for long-term financing of development projects.
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The informal workers, as well as other members of the public, run a string of informal saving schemes which are outside the net of the Bank of Uganda.