Employer Action Code: Act
Ugandan pension plan sponsors were required to apply to the regulatory authority for plan licenses by year-end 2012. Administrators, custodians, fund managers and trustees should also have applied for a license. If the deadline was missed, it still may be possible to obtain an extension from the regulatory authority. Processing of applications and the issuance of licenses is expected to take some time until the regulatory authority is fully staffed for the task.
The Ugandan pension system will be transformed by the Uganda Retirement Benefits Regulatory Authority Act 2011 and the Retirement Benefits Sector Liberalization Bill currently before Parliament. The current system lacks a policy framework — the mandatory pension plan, the National Social Security Fund (NSSF), to which employers and employees in the formal sector are currently required to contribute, has been subject to much public criticism. And the system's voluntary employer-sponsored plans have no legislative structure or supervision.
The new laws are intended to:
- Ensure that pension plans are properly regulated and governed, by requiring them to be licensed by the Uganda Retirement Benefits Authority (URBA), a new body created by the 2011 act and operational since September 2012. All pension plans, including the NSSF, were required to apply for a license by Dec. 31, 2012, but the licensing regulations for pension plans and trustees were not published until mid-December, and regulations relating to investment managers, custodians and administrators are still pending, so URBA will consider extensions to the deadline.
- Eliminate the NSSF monopoly and allow other licensed pension plans to operate and compete for mandatory contributions. These plans will need to comply with a set of requirements, including a provision for minimum retirement and other benefits. Employees will be able to direct these contributions, as well as voluntary contributions to their plan of choice. It is not yet known when these measures will come into effect — the Liberalization Bill is currently before Parliament.
Implications for Employers
Employers should ensure that they have submitted to URBA all the necessary forms and documents required by the regulations, and that they and their service providers submit all further documents required when further regulations are issued. Employers will also need to consider how they might adapt their benefit programs to best meet the requirements and opportunities provided by the liberalization of the pensions market in Uganda.