Government has agreed to liberalize the pensions sector, opening up a sector hitherto monopolized by the state\'s National Social Security Fund (NSSF), the finance minister said on Friday.
Although Uganda has an open and thriving banking system, private sector pensions are controlled by the NSSF, a fact economists say has curbed growth and efficiency in the financial services sector.
Syda Bbumba told Reuters by phone that Cabinet took a decision to open up and stimulate competition in the pensions and we\'ve already submitted a bill to parliament.
She explained that the move is intended to enable workers have a choice with whom to invest their savings and the government will only retain oversight role.
Employers in the private sector are required to remit 15 percent of each worker\'s monthly salary to NSSF as social security savings to be redeemed upon retirement.
The employer contributes 10 percent while the employee adds the remaining 5 percent, under the terms of a 1985 law.
NSSF, with assets of about 1.1 trillion shillings at 30th June 2008, has been hit by a string of scandals over the past several years over botched and corrupt procurement deals.
The fund is also accused of paying annual interest that is often below inflation levels, diminishing workers\' savings. It paid a 2.5 percent interest rate in the 2008/09 financial year.
David Chandi Jaamwa, a former managing director is facing charges of abuse of office and causing financial loss.