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THE RETIREMENT BENEFITS SECTOR LIBERALISATION BILL 2011 An Analysis and Perspective from Platform for Labour Action (PLA) Part 3 of 3

This is a continuation of the analysis of the Retirement Benefits Sector Liberalization Bill 2011 by Platform for Labour Action (PLA) with recommendations to improve key elements in order to ensure that the Bill caters to the welfare and benefit of all Ugandans. In this section, recommendations are made for areas that are not covered in the Bill.

OTHER RECOMMENDATIONS OUTSIDE THE BILL

1. AGE OF ELIGIBILITY TO CONTRIBUTE

The current legislation bases eligibility to contribute on age. However, The Bill is silent on this issue. It is not yet clear whether there will be age requirements with regard to the mandatory contributions or whether any person in employment regardless of age will contribute.

RECOMMENDATION

The Bill should expressly state the age of eligibility to contribute.

2. PART-TIME EMPLOYMENT AND CASUAL LABOUR

Another issue which needs to be addressed is how persons involved in casual labour and part-time employment will be treated.

RECOMMENDATION

The law should expressly provide mechanisms for casual labourers and part-time employees to contribute to retirement benefit schemes.

3. NON UGANDAN EMPLOYEES

It is also unclear how the non-Ugandan employees who already contribute to social security schemes in other countries will be treated. Though the NSSF Act contained a provision for exemption from social security contribution, in practice, it has been difficult to obtain exemption from the NSSF.

RECOMMENDATION

The law should specifically prescribe measures and state how the savings of such employees will be handled. E.g. non Ugandans can be allowed to contribute to any scheme of their choice and when they are ready to back to their own countries, the scheme should re-reimburse all their contributions and the interest accrued.

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4. EXISTING OCCUPATIONAL SCHEMES

There are a number of occupational schemes that are in place. However the Bill does not expressly provide what will happen in the event that they are denied a license. This is despite the existence of Clause 6 on the formation and licensing of umbrella retirements benefits schemes.

RECOMMENDATION

It is important for the Bill to state in clear terms what will happen to those already existing benefits schemes whose application for a license to manage retirement schemes may be rejected.

The Bill must then state what will happen to the monies that had already been saved with such schemes after their registration is rejected. Also, the option of the scheme merging with a bigger scheme should be provided for or the option of members of such schemes transferring their savings to an alternative licensed scheme.

5. SECTION 37 MINIMUM CASH RESERVE

This has not been prescribed. We recommend that this is defined in the law to strengthen protection of savers.

CONCLUSION The liberalisation of the Pension sector is long overdue, but whereas the sector is being opened up, there is be need for strong regulatory systems and monitoring to ensure effectiveness and compliance and secure contributions made. Platform for Labour Action (PLA) commends the initiative of liberalizing the pension sector especially since it seeks to include the majority of workers in Uganda who have not had access to pensions/social insurance such as those in the informal economy and those working in establishments of less than five persons.

You can find Part 1 and Part 2 of this analysis at www.parliamentwatchuganda.org

For Further information and clarification contact Platform for Labour Action Plot 68, Kanjokya Street,Kamwokya P.O. Box 9714Kampala, Uganda Website: www.pla-uganda.org Email: info@pla-uganda.org Tel: 256- 312 260196, 256 -414 253383 Fax: 256 -414 230142