How retirement sector reforms have evolved

The implementation of Uganda’s retirement sector reforms kicked off in earnest in 2011 following years of engagement between the stakeholders. These reforms were aimed at creating a robust regulatory and enabling environment for the operation of retirement funds. Whether these reforms have delivered or are on course to achieve the intended objectives is a discussion that this article attempts to delve into.
There are three broad retirement schemes in Uganda. These are the mandatory contributory, voluntary private and non-contributory retirement schemes. 
The National Social Security Fund (NSSF) is Uganda’s only mandatory contributory retirement scheme covering all eligible employees in the private sector including those in government excluded from the public sector pension regime.  The NSSF is a provident Fund, meaning it pays out members’ retirement benefits in lumpsum when due. 
 Organisations can also operate additional voluntary occupational private retirement schemes alongside the mandatory NSSF.  Civil servants are covered by the non-contributory public service pension regime financed directly from the consolidated fund. Retired civil servants receive periodic monthly pension payments.  
Fulfilling its pledge to kick-start sector reforms, the government shepherded the enactment of the Uganda Retirement Benefits Authority Act in 2011.  The hallmarks of this Act were the establishment of the Uganda Retirement Benefits Authority (“URBA”) and obligation for all retirement funds in Uganda to be licensed. Retirement funds had previously operated without any regulatory oversight. A well-functioning regulator would bolster savers confidence in the vitality of the sector.
The Retirement Benefits Sector Liberalisation Bill (“2011 Bill”) containing sweeping sector changes was further introduced on the floor of Parliament in 2011 for deliberation. This Bill intended to liberalise the retirement sector by removing the NSSF monopoly over mandatory contributions thus providing for competition amongst licensed retirement schemes. It further proposed to convert Uganda’s public sector pension scheme into a contributory one with both the government and employees remitting contributions. The Bill also endorsed the extension of coverage of social security to all employees in the formal sector as well as the portability and transferability of retirement savings across licensed schemes both in Uganda and the East African Community. 
The National Organisation of Trade Unions (“NOTU”) vehemently opposed opening up Uganda’s mandatory contributory scheme supporting continuing NSSF monopoly.  Government’s decision to uphold NOTU’s objection and the subsequent withdrawal from Parliament of the 2011 Bill elicited mixed reactions.  While some applauded government’s decision, others felt that by maintaining the monopoly over mandatory retirement contributions the government was contradicting its objective of obtaining maximum value from the retirement funds.
 The Bank of Uganda too supported the opening up of Uganda’s pension sector as a means of increasing competition amongst the sector players. Those in support of government decision were distrustful of the private sector being entrusted with workers savings.          

 NSSF (Amendment) Bill, 2019
A watered down version of the 2011 Bill in the form of the NSSF (Amendment) Bill, 2019 was introduced on the floor of Parliament for deliberation in 2019. This Bill played safe and excluded most of the sweeping reforms that were contained in the 2011 Bill. The proposal to convert the public sector pension scheme into a contributory one was dropped. Considerations for the transfer and portability of retirement funds across registered schemes too were overlooked. An issue that has grabbed headline attention in the 2019 Bill is the savers quest for the midterm access of retirement benefits. It is, however, important to reflect back on whether retired employees are best served with a provident fund that pays out the savings in one lumpsum or periodic pension payments.  
Uganda’s retirement sector reforms remain work in progress.  The continued implementation of reforms should strike a balance between regulatory issues that augment further the security of workers savings and the commercial considerations that guarantee the greatest economic benefit to the savers and the economy. 
Proactive steps should be taken to ensure that retirement funds can take care of the retired elderly but also increase social security coverage so that majority can benefit in future.