Uganda’s Workers’ representatives in Parliament have said that the Retirement Benefits Sector Liberalisation Bill should be dropped in the best interests of the workers in Uganda.
The four Workers MPs including Arinaitwe Rwakajara, Margaret Rwabushaija, Agnes Kunihira and Dr. Sam Lyomoki dismissed the bill describing it as a huge risk to workers savings.
The Retirement Benefits Sector Liberalisation bill, 2011 seeks to repeal the Pensions Act, Cap 286 and the National Social Security Fund Act, Cap. 222. The bill seeks to open up the pension sector that will consequently end the monopoly of the National Social Security Fund (NSSF).
It also seeks to allow those who have saved money for more than 10 years to access 30 per cent of their savings to secure mortgages or loans from any financial institution for the purchase of a house.
The workers MPs today appeared before parliament’s finance committee chaired by Rubanda East MP Henry Musasizi and noted that it is the mandate of government to ensure and enhance social security and protection of all citizens.
Hon. Margaret Rwabushaija said that liberalising the pension sector would mean that government is denying citizens the access to social security and exposing employees’ contributions to high risk in the hands of speculators who only invest in profitable ventures.
Hon. Arinaitwe Rwakajara also expressed reservations about liberalising the pensions sector saying that workers are likely to end up losing their money at the hands of profit makers.
He highlighted an interpretation of accrued benefits in the bill to mean that in the event a private fund makes losses in its investments – contributor savings will be wiped out.
Dr. Lyomoki said that the workers MPs have decided to reintroduce the NSSF amendment Act of 2009 in order to make NSSF more competitive in the investment market.
Dr. Lyomoki argues that the liberalisation bill is not being pushed by the government in the interest of workers and the economy, but for the benefit of international financial market players who intend to get their hands on the over seven trillion shillings in savings at NSSF.
Hon. Rwabashaija argues that liberalisation will not automatically translate into higher coverage but on the contrary coverage will drop as research in other countries has shown. She stated a few examples including Uruguay where social security coverage dropped from 55 percent to 51 percent in eight years following liberalisation.
This comes as a survey conducted by Uganda Retirement Benefit Regulatory Authority (URBRA) and Uganda Bureau of Statistics (UBOS) indicates that only 57 percent of the companies assessed are registered with NSSF. Another 43 percent are not registered, according to the survey.
The Employment Benefits Baseline Survey Report, 2016, which was released in Kampala today, covers a total of 2,933 companies employing 106,403 workers who were interviewed. The companies surveyed are located in nine districts which include Gulu, Mukono, Jinja, Wakiso, Mbarara, Masaka, Mbale, Soroti and Kampala.
Eighty one percent of the companies are in the private sector, 10 percent are non-governmental organisations while nine percent are government ministries, department and agencies.