Out of the 2.8 million people saving with 68 retirement benefit schemes in the country, over one million are dormant or have not remitted savings for over a year, the 2020 Uganda Retirement Benefits Regulatory Authority (URBRA) report has revealed.
According to the report, which focuses on the pension sector performance, two million of the savers are with the National Social Security Fund (NSSF).
However, the report says only 800,000 are regularly remitting contributions to NSSF and that there are 1.2 million dormant accounts.
According to UBRA, the 800,000 represent just 40% of the active accounts under NSSF.
Speaking to New Vision , Martin Nsubuga, the UBRA chief executive officer, said the findings are not rosy for the pension sector.
“NSSF alone has 1.2 million people who are almost not remitting. This is bad for the sector. The pension sector would be growing bigger if all these were actively remitting funds to NSSF,” Nsubuga said on Monday.
NSSF speaks out
In a separate interview, Richard Byarugaba, the NSSF managing director, confirmed the development.
According to him, an account is considered dormant if it has not been active or not credited for a period of one year.
“Yes, it is true. Majority of the savers are out of employment and their accounts have been dormant for more than a year,” he said.
“We normally do follow-ups and when we ask, they (the holders of dormant accounts) say they are out of employment.However, this figure (1.2 million dormant savers) is not static. It keeps changing as people get employed,” he explained.Byarugaba, however, noted that the number increased during the COVID-19 pandemic. But he did not give statistics on the current status of the dormant accounts.However, Byarugaba said the new Insurance Law will address some of these issues by allowing individuals to voluntarily save even when they are out of employment. Pension funds Meanwhile, there are ten asset classes that were approved by UBRA for the 68 retirement benefits schemes for investment. But, according to a UBRA report, five of the most invested in, including government securities, are most sought by the schemes.The others include quoted equities, private equities, corporate bonds and fixed deposits.According to the report, government securities were allocated sh12.8 trillion by the retirement benefits schemes.The funds were lent out to governments of Uganda, Kenya, Tanzania and Rwanda, the report says.According to the statistics shared by UBRA, 66.4% of the pension funds were lent to the Uganda […]