What is your assessment of
The current pension system in
What makes the pension sector important to a country's socio-economic development?
Pensions can impact on socio-economic development in two main ways. Firstly, they are an important element of any social protection system, which, when properly implemented, can serve as drivers for the achievement of inclusive, pro-poor and equitable growth. In addition, pension funds can be an important source of long-term, domestic capital, which can help to raise savings rates and finance economically productive projects.
So in your view, what is the economic cost of
The underdeveloped pension sector means that many vulnerable elderly are not protected against poverty in old age. For example, 65% of those over 60 years suffer from old age disabilities. Efficient pension systems enable ageing members of society to face their future with realistic expectations and a certain level of security, without placing an unbearable burden on government finances or younger generations.
In addition, there is an economic opportunity cost from under-utilizing pension assets. For example, the NSSF holds Shs 4 trillion in assets, representing 5% of GDP. Even improving the return on these assets by 1% can generate a significant sum to reinvest in productive projects and support members when they retire.
What would you say are the missing links in
Rather than missing links, the current pension reform process represents a foundation of building blocks after which further work will have to be done. The aim of the government's reforms is to place the current pension schemes on a sound financial and governance footing. After that, more work will be required to extend coverage to more Ugandans. This will involve implementing the broad ranging plans outlined in the social protection framework and developing suitable, innovative products to help and encourage informal sector workers to save over the longer-term.
How would you describe
The government needs to be commended for tackling pension reform early - using the country's favourable demographics to put a robust pension system in place. The experience in other countries has shown that pension reform is always challenging and controversial but if not addressed in time countries can 'grow old before they grow rich.'
Some stakeholders are opposed to the liberalisation process that will see NSSF lose its monopoly. What is your take on this?
The NSSF will still play an important role in the pension system going forward. Introducing competition for social security contributions gives workers choice - and indeed many may will choose to keep their contributions with the NSSF. However, providing a benchmark of other funds to compare the NSSF with should drive improved performance and transparency and indeed it can be argued that this is already happening as the NSSF have reduced their costs, improved their service level and started to diversify their portfolio, which should lead to improved returns.
Which examples of liberalizing the pension sector can
Other countries in
Where do you see
In a few years' time, it is hoped that the government's planned social protection reforms would provide a basic protection for all vulnerable elderly citizens in
It would also be good to see some innovative schemes that can help informal sector workers participate in the pension system introduced - maybe along the lines of the Mbao scheme in
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