On April 25, the Parliament of Uganda passed a law establishing the Retirement Benefits Authority (RBA), an independent regulatory authority responsible for regulating the establishment, management, and operation of retirement benefit programs in the private sector. (Many details, including when the RBA will begin operation, are not yet known.) The law is the first of two complementary laws meant to open up the pension sector in Uganda; a second law currently under consideration in Parliament would set up the legal and regulatory framework for the establishment of new retirement benefit programs in the country. Currently, the National Social Security Fund (NSSF) is the only provider of retirement benefits to workers in the private sector. According to the government, the RBA will protect the interests of members and beneficiaries of retirement benefit programs by promoting transparency and accountability within the pension sector.

The new law prohibits retirement benefit programs from operating unless licensed by the RBA. (In the coming months, the RBA will draft the guidelines for the licensing process.) At present, this only affects the NSSF, a provident fund program that has held a monopoly on the collection and management of social security contributions since the passage of Uganda's current social security legislation in 1985. However, if the second law is passed in 2011 as expected, new pension institutions, which provide retirement products and services, would also be able to apply for a license to operate and compete with the NSSF for members. As a result, the government anticipates that the pension sector will become more competitive and, therefore, more efficient.

The NSSF covers workers in companies with five or more employees. Currently, employees contribute 5 per cent of gross monthly earnings and employers contribute 10 per cent of gross monthly payroll to the NSSF. At age 55, employees can receive a lump sum old-age benefit equal to the total employee and employer contributions plus interest.

Source: Social Security Programs Throughout the World: Africa 2009, US Social Security Administration; "Parliament Passes Retirement Benefits Bill," NewVision, April 26, 2011; "What It Means for NSSF Monopoly to End," The Observer, May 4, 2011.

Legislation date: 04.2011