Savers’ contributions in safe hands – pension regulator

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By ISMAIL MUSA LADU

Kampala. Workers’ contributions to several pension schemes in the country have grown to Shs10 trillion according to a survey conducted by the sector regulator. These contributions are growing both in terms of coverage and compliance levels.

According to the Annual Retirement Benefits Sector Report for 2017, the future of the country’s pension sector is not only healthy but also projected to grow further over the coming years.

“Sector coverage is now at 14 per cent compared to the six per cent in 2014. Assets also increased to Shs10.04 trillion in 2017 compared to Shs5.2 trillion in the last four years,” the acting chief executive officer, Uganda Retirement Benefits Regulatory Authority (URBRA), Mr Martin Anthony Nsubuga, said while presenting the sector report last week.

This means between 2014 and 2017, the number of Ugandans who were trying to safeguard their future after retirement through saving with different pension schemes in the country, is slowly but steadily growing.

The growth of savings, technically referred to as assets, is mainly being driven by members’ contributions, investment earnings from government bonds, deposits and listed equity.
According to the regulator, this was a commendable performance given the declining interest rate environment and depressed equity market conditions witnessed in 2017.

Querying the reliance of sector players’ investments in government bonds, Mr Joseph Lutwama, a financial markets and business strategy expert, wondered whether that approach is prudent, citing government growing debt portfolio as a reason to be wary of.
But with strengthened supervision, URBRA management is confident saying: “The sector has no liquidity problem.

There is no evidence, going by the 2017 annual performance report that the (pension) sector is distressed and therefore cannot give members their savings,” Mr Benjamin Katende, a senior researcher with URBRA, said while presenting the annual report.
However, “…We remain cautious as some investments saw positive returns but lost value on original capital,” reads the report in part.

Pension sector
To date, the sector is comprised of 2 Mandatory, 8 Umbrella (with 104 participating employers) and 53 segregated schemes. In line with Section 33 of the URBRA Act (2011), the Authority has licensed nine Administrators, 7 Fund Managers, 5 Custodians, 4 Corporate Trustees and 415 Individual Trustees to ensure segregation of duties with the goal of mitigating operational and governance risks.

During the year, URBRA enhanced supervisory approaches and developed new risk-based supervision tools.

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