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Saving for retirement remains a relatively unfamiliar concept to the majority of Ugandans, as highlighted in the recent release of the 10th Annual Retirement Benefits Sector Report for 2023 in Kampala. State Minister for Finance and Planning, Amos Lugolobi, emphasized the importance of retirement savings, describing it as a patriotic deed with significant implications for both individual livelihoods and the broader economy.
According to Mr. Lugolobi, retirement savings contribute substantially to Uganda’s gross savings, accounting for 60 percent, and represent 11.5 percent of the gross domestic product (GDP). He emphasized that these savings play a vital role in national development by providing funds for government borrowing through bonds, treasury bills, and securities. Additionally, pension schemes contributed up to Shs235 billion in taxes to the government in 2023, demonstrating their economic significance.
The report by the Uganda Retirement Benefits Regulatory Authority (URBRA) revealed several key insights into the state of retirement savings in Uganda. In 2023, pension sector assets experienced significant growth, expanding by Shs2 trillion from Shs20 trillion in 2022 to Shs22 trillion. Despite this growth, the number of savers only saw a slight increase of 126,504 members, totaling 3,142,311 individuals.
Remarkably, out of over 3 million savers, only 298 were voluntary contributors, indicating a prevalent reliance on mandatory schemes such as the National Social Security Fund (NSSF). The majority of retirement savings are channeled through these compulsory schemes, reflecting a limited culture of voluntary retirement planning among Ugandans.
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URBRA reported that despite challenges, including a decrease in the average return on member balances, the pension sector demonstrated resilience. Total assets continued to grow, reaching Shs22 trillion, with fixed income investments remaining stable. However, the sector faced setbacks such as unrealized losses amounting to Shs1.2 trillion due to foreign exchange losses and equity price declines, particularly on the Nairobi Stock Exchange.
Mr. Lugolobi highlighted URBRA’s efforts in improving supervision efficiency, leading to the recovery of Shs26 billion. This achievement is expected to enhance confidence among savers regarding URBRA’s oversight capabilities.
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