Retirement Benefits Sector scores an 11% GDP Contribution.
Written by Derrick Asaba on August 26, 2021
Despite the uncertainties brought about by the COVID-19 pandemic that in turn negatively affected different sectors in the country, the Retirement Benefits Sector continued to grow.
While presenting the sector performance highlights of the Uganda Retirement Benefits Regulatory Authority (URBRA), the CEO of the body, Martin Nsubuga leaned this on the increasing numbers of Ugandans who took up the savings scheme.
“Currently, 2,821,910 Ugandans are covered by the existing retirement savings arrangements with the majority under the mandatory National Social Security Fund (NSSF),” Nsubuga said.
However, this is only 18% of the estimated workforce of 15.9 million countrywide which indicates that 82% of the working population is not saving for retirement.
Nsubuga commended employers and employees who contributed to their retirement savings schemes throughout the year amidst economic challenges.
He added that sector inflows on account of contributions increased by 5.3% from 1,498 billion in 2019 to 1,578 billion in 2020.
In terms of investment, government securities dominated with 76.11% of the investment portfolio which increased allocation was mainly to guard against the negative performance of equities.
By the end of 2020, sector investments in all asset classes had increased to UGX 16.31 trillion from UGX 14.28 trillion in 2019.
The major source of income was interest, accounting for 96.3% of the total sector income which consequently enabled all savers to enjoy an average annual interest of 9%.
This was revealed at the Media Centre today to the press as URBRA published the 2020 Retirement Benefits Sector performance report officiated by the Minister of Finance, Planning and Economic Development, Matia Kasaija.
Kasaija is optimistic that the retirement benefits sector can grow further but only when all Ugandans adopt a savings culture and urged URBRA and all stakeholders to fuel the sensitisation process.
“The future of the retirement benefits sector is bright. I urge URBRA and all stakeholders to continue sensitizing Ugandans about the need to develop a saving culture ― this is good for them as individuals and good for the long term growth of the economy,” he said.
He further lauded the retirement benefits sector as key to Uganda’s economy for its ability to mobilise national savings and enhance population productivity and wellbeing.
“The retirement benefits sector contributes significantly to the country’s gross domestic savings, which account for a big proportion of the Gross Domestic Product (GDP),” Kasaija retaliated.
As of July this year, the sector assets were worth UGX 17 trillion.
The URBRA CEO, Nsubuga reaffirmed the Authority’s commitment to continue guiding the sector and ensuring prudent management of saver’s funds.
He said that the sector remains keen on identifying and mitigating risks before they impact on funds; improving scheme operational efficiency and extending coverage to the informal sector workers.