Pensions Regulator Still Lacks the 'Teeth To Bite'

1847 Views Kampala, Uganda

In short
From poorly managed schemes and employers not remitting money, the URBRA can hardly impose penalties or even ensure that workers savings are adequately protected. Moses Bekabye, Interim Chief Executive Officer URBRA reveals that for the sector to be transformed, further awarding the authority powers to protect savings and investments, the bill to reform the pensions should be passed.

Established by an Act of Parliament in 2011, the Uganda Retirement Benefits Authority (URBRA) still lacks the capacity to reform the pension sector, largely dominated by the National Social Security Fund (NSSF). From poorly managed schemes and employers not remitting money, the URBRA can hardly impose penalties or even ensure that workers savings are adequately protected. Moses Bekabye, Interim Chief Executive Officer URBRA reveals that for the sector to be transformed, further awarding the authority powers to protect savings and investments, the bill to reform the pensions should be passed.

//Cue in: Capacity is necessary…
Cue Out: …their funds are actually safe//

URBRA’s offices at Communications House are cramped yet the organizations’ staff is still relatively thin, if compared to the sector they are trying to regulate. With about 7percent of the working population currently linked to a pension scheme, this figure remains minute, and according to Bakabye the reforms, as indicated in the Retirement Benefits Sector Liberalisation Bill 2011, could improve that figure. Bekabye explains the potential for the sector if the bill is passed.

//Cue in: The potential is actually huge…
Cue out: …that is what we are looking at in long term//

Opposition to this bill has mostly been premised on keeping Uganda’s largest scheme, NSSF, which currently has Shs3.5trillion and averaging monthly contributions of Shs56billion as the major player. Other schemes manage much lower asset volumes, but Bekabye points out that competition alone would improve the sector even if NSSF has improved the governance structures. The regulator is yet to determine the value of pensions in the country. Additionally with a thin staff, efficient regulation of Fund Managers, Fund Administrators, Pension Schemes and Trustees is only on paper. In its first year of operation, the regulator can only boast of issuing licenses yet challenges like petitions by contributors are on the rise and confidence is still low. 

Rose Musonye Kwena, Chief Manager Corporate Communications Department at Kenya’s Retirement Benefits Authority, says that a sector still dominated by governance issues, the regulator needs to be empowered more.

//Cue in: The bill is going…
Cue out: …stop the bleeding before you deal with the issues//

Uganda lacks long-term funds for investment and relies on commercial banks that lend for no more than six years for most borrowers. Kwena notes that key to unlocking this long-term capital will require liberalizing the sector, if Uganda is to boost domestic savings. URBRA’s Bekabye is confident the bill will be passed before the end of the financial year and that there were “not going to relent on this bill until it is passed.”

To be taken seriously, the staff will has to be more than doubled to include actuarial scientists, lawyers, economists, social scientists, financial risk and management officers. Concerns on passing the bill in its current form have included Insurance Companies, which claim it could lead to double regulation. The insurance sector is regulated by the Insurance Regulatory Authority (IRA). The bill also recommends reforming the Public Service Pensions, which in 2012 was embroiled in a corruption that saw Shs165bn meant to cater for retiring public servants was swindled.