Uganda’s pension sector has undergone a setback in growth during March 2021 with contributory schemes registering a reduction in contributions and a notable increase in withdrawals.
A policy brief authored by the Ministry of Finance Planning and Economic Development for the period ended March this year, implies that Uganda’s pension schemes posted an increase in withdrawal of benefits amid a reduction in investment income.
According to data from Uganda Retirement Benefits Regulatory Authority (URBRA) during the said period, the National Social Security Fund (NSSF) experienced a substantial increase in withdrawal of benefits payments and a reduction in assets held by umbrella schemes.
NSSF’s financial results reveal that a total of UGX558b was paid out in benefits during the first quarter of 2021 compared to UGX430.5b in the same period last year, which represented a 29.6 % growth.
Of UGX558b, 98 % of the amount was paid to living members while 2 % was paid out as survivor benefits.
The Fund registered a decline in income, during the period under review, which fell to UGX31.1billion compared to UGX35.2billion in March 2020.
According to pension’s sector regulator, URBRA, assets of umbrella schemes, which play a key role in the performance of the pension sector registered a 0.6 % decline due to significant growth in outflows that exceeded growth in both investment income and contributions.
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URBRA noted that over UGX20billion was withdrawn from February to March this year.
Throughout March, the Ministry of Finance noted a sharp increase in new business registrations from 1,614 in January to 5,073 in March 2021.
The increase was attributed to a return in investor confidence with the Uganda Securities Exchange recording an upward movement in All Share Index from 1,314 in January to 1,390.6 in March.
The Ministry also noted a reduction in the trade balance deficit, which reduced by 10 % from $196.8m in January to $178.1m in February due to a 9 % increase in exports from $410.4m in January this year to $447.1m in February 2021.
Throughout the first quarter of this year, microeconomic growth presented a deeper growth in the telecommunications sector with more than 50% of Ugandans owning a mobile phone.
Mobile phone subscriptions posted a year-on-year growth of 4 %, occasioned by the recovery of the economy compared to the pre-Covid-19 period.