28 February 2013

Uganda: Finance Minister to Table Pensions Bill

The finance minister, Maria Kiwanuka, is set to table a revised version of the Pensions Liberalisation Bill 2011 to Parliament next month, following the completion of work by a taskforce.

The task force was instituted to make adjustments on the Bill that was first tabled about two years ago. According to Moses Bekabye, the chairman of the task force, the minister was set to present the bill to Parliament in 2012, but Parliament's work time was consumed by the corruption scandals in the Office of the Prime Minister (OPM) and the death of parliamentarian Celinah Nebanda.

"But this is behind us now, the technical committee has finalised with refinements of the bill and other issues like governance, investment and treatment of schemes in transition like NSSF," said Bekabye during an interview.

Among the proposals in the revised Bill is the removal of the threshold of 5 and above and ensuring that anybody in formal employment contributes. Previously, only companies with five or more employees were required to contribute to their employees' savings.

"There are some firms with two employees and with operations all automated but are making billions," said Bekabye.

He said one of the key issues is to ensure there is choice.

Bekabye, also the interim chief executive of the Uganda Retirements Benefit Regulatory Authority (URBRA), said the minister is expected to introduce amendments to the Bill at Parliament committee level.

Retirements Benefits Sector Liberalisation Bill 2011 has been going through the strenuous process of parliamentary and consultative process.

But Bekabye says some of the refinements and proposals if approved by Parliament and later turned into law will ensure that when people are contributing voluntarily their incomes are tax free.

"This means the income tax law will be amended," said Bekabye.

Bekabye said it is the duty of the employer to provide for the retirement of the employees even as employees also make their own savings.

The other proposals in the Bill are that if contributors have saved for 10 years, they will have access to 30% of their savings to leverage to buy homes.

Pensions reform is expected to unleash immense opportunities for Uganda. It is expected that there will be upscaling in skills levels for professionals needed in the industry, custodial services, fund management, trustees and valuers among others.

But delay in passing the law has been cited as a likely cause for the winding up of one of Uganda's unique savings and investment vehicle-unit trusts in 2012.

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