By Our Reporter
Insurance companies have provided retirement benefits products for many years and are currently responsible for managing a significant percentage of voluntary schemes in Uganda. Retirement Benefits/Savings schemes provide the comfort of knowing that at retirement, an individual will have the resources available to cater for them and their families. The individual (including those who are self-employed), social group or occupational group who voluntarily contribute to a scheme should therefore be given the option to choose which scheme will be beneficial- depending on their own goals and expectations.
One of the key products that this industry provides are Guaranteed Fund Schemes. A Guaranteed Fund Scheme is designed to guarantee the capital investment, as well as allow for the scheme to earn a minimum agreed upon interest (return on investment) regardless of how the Fund performs. In the 2008/2009 financial crisis, for example, while many investments returned zero or even negative, many insurance schemes were still declaring positive because of the guarantee they had provided.
As the guarantor, the insurance company, as well as administering the scheme, also needs to carefully select their investment vehicle to ensure the continuity and longevity of the pool (since these are long term savings). This ensures that even if the Fund does not make as much money as expected, the Company WILL pay you not less than the agreed upon interest. We could therefore say the fund is “insured