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Rethinking Pension Sector Reforms as a Means of Strengthening Social Security Frameworks in Uganda

On 7th May 2015, KAS is implementing a high-level round table on social security systems in Uganda and the role state pensions systems can play in this regard. The event is connected to the publication of the Reality Check on Social Security Systems.

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The Konrad-Adenauer-Stiftung (KAS) is promoting the concept of a Social Market Economy also internationally as a consideration and inspiration for policy makers and representatives of the private sector, who influence the economic and social development of different countries around the world. Sharing experiences in economic policy drafting and balancing state-led social security schemes with the preservations of individual and market freedoms is therefore at the core of KAS’ international efforts to strengthen the global link between economic growth and social justice. One of the principles of Social Market Economy is that of social security as social inequalities are a considerable strain on any society and economy. Therefore, different forms of social security systems have been applied by nations, religious institutions, or private companies for centuries in order to mitigate the many negative effects of poverty.

Social security refers to a formal arrangement concerned with protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. It is essentially a concept developed in Europe in the 19th Century mainly aimed at protecting workers in the formal economy in a clear labour-capital relation in capitalist society. On the other hand, social protection is seen as a more comprehensive concept being a reference to a set of benefits available (or not available but considered necessary) from the state, the market, civil society and households or through a combination of these agencies to individuals and households to reduce or deal with multidimensional deprivation.

Uganda being essentially a peasant economy the provision of social security is, generally still a preserve of the family and, may be, the clan. The protection of workers after retirement, if any, is covered legally only for a few in form of pensions, in the public service and the National Social Security Fund in the private sector. The Public Service Pension Scheme (PSPS) is run by the Ministry of Public Service, catering for civil servants (central and local government), the army and to some extent police and prisons. The second one is the scheme run by NSSF set up by the National Social Security Fund Act. Together, the two give protection to about 5% coverage of Uganda’s working population. What the above therefore means is that 95% of Uganda’s population is excluded from social security .

In addition to the above, a number of private pension schemes are operated by some insurance companies and large companies. These schemes include private pension schemes, health insurance and education service. Insurance companies have exclusively managed insurance for injury at work as required by the Workers’ Compensation Act 2000, which obligates employers to insure against it.

In 2002, the Ministry of Gender, Labour and Social Development set up a Social Security and Pensions Sector Stakeholders Transition Group (STG) with a mandate to advise on necessary reforms in the sector. The group produced a report in November 2003 in which it made several recommendations including the following: review existing legislation to provide constitutional protection of social security and pension rights to all Ugandans regardless of where they are employed or not, Establish a competent and independent regulator for the entire social protection sector to register, license, set standards and enforce the law; Make social protection contribution mandatory for all working persons, No social security and pension arrangements should be funded from the consolidated fund and set-up a 3 tier benefits system consisting of social assistance, mandatory benefits and additional/voluntary benefits; and introduce fair competition among the different licensed retirement benefits schemes for offering retirement products and services

The proposed pension reforms have raised controversy in Uganda with a number of stakeholders expressing opposition to the move to liberalize the pension sector. These point out that, Uganda is a small underdeveloped economy, with no capacity to vet external players, who may enter the pension market to collect contributions and then later disappear with the money. On the other hand, those supporting the move argue that it will break the monopoly of the NSSF and the PSPS and bring many people in the informal sector on board to access social security benefits.

Against this background, KAS is organizing a round table discussion with the objectives to provide a platform for dialogue and cross-learning for key public and private sector stakeholders on how to strengthen Uganda’s social security frameworks, agree on how to best to implement pension sector reforms in a way that will ensure social justice, share experiences and highlight international best practices in pension sector reform, highlight the role that the private sector can play in strengthening the pension sector, and commit to specific actions in the months following the roundtable and follow-up actions to be taken, in line with the recommendations of the round-table.

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Serena Hotel, Kampala


Stakeholders Meeting in Discussion of Pension Sector Reforms: Rethinking Pension Sector Reforms as a Means of Strengthening Social Security Sector Frameworks in Uganda
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Awel Uwihanganye

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Programme Coordinator +256 312 262011/2

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