Pension sector assets topped Shs 6.5 trillion in 2015, a new report by the Uganda Retirements Benefits Regulatory Authority (URBRA) has shown.
URBRA CEO David Nyakundi told journalists that the increase in the assets was attributed to the improving quality of governance in both public and private schemes in the country, which have brought about public confidence.
“Indeed, we have started noting the effect of the growing confidence,” said Nyakundi.
The report shows that total fund inflows increased from Shs 1.5 trillion in 2014 to Shs 1.7 trillion in 2015, consisting of employers’ and members’ contributions, income from rents, interest, and capital gains and dividends. The member and employer contributions amounted to Shs 829 billion, accounting for 47% of the total inflows.
Benjamin Mukiibi, the URBRA senior research and sector development officer, said it is time for all Ugandans to embrace pension schemes for adequate, affordable, sustainable and robust social security.
He said the current 11% coverage is too low, covering only public sector, and a small proportion of formal private sector workers.
Uganda’s labour force stands at 15.6 million out of a population of about 35 million.
The report also shows that the pension money has been invested in government securities (69.3%), equities (18%), fixed deposits (5.9%) while the rest is invested in private equity, corporate bonds, property and offshore investments and guaranteed funds.
The return on assets was 14% while return on investments, inclusive of the adjustment to fair value, was 18.2% – largely attributed to a favourable micro-economic environment.
On the other hand, income from investments as well as adjustment for fair value increased by 33% from Shs 682 billion in 2014 to Shs 908 billion last year, as a result of increased income from government securities. Expense ratio reduced from 2.2% to 1.3% demonstrating how schemes and fund managers are ensuring that costs and investment risks are optimally managed so that the ultimate beneficiaries get adequate retirement incomes.
And while the increase in the value assets shows a positive trend of the growth in the pension industry, this is relatively a small amount of saving based on the expanding country’s economy, whose Gross Domestic Product now stands at $27billion.
Going forward, Nyakundi said the regulator would continue to implement public sensitisation programmes to grow the sector, expand coverage, and promote extensive awareness about the pension industry.