By Our Reporter
Parliament: The Committee of Public Service and Local Government has cautioned the Minister of Public Service, Hon. Muruli Mukasa against commercialisation of the Pensions Fund saying this may lead to recurrence of the challenges faced by the National Social Security Fund (NSSF), Parliament has reported.
The minister appeared before the committee on Tuesday, 28 March 2023 to present his views for consideration of the Public Service Pension Fund Bill, 2023.
The Committee Chairperson, Hon. Godfrey Onzima said that the committee is uncomfortable with the investment provisions in the Bill saying that the core objective of the Bill is to streamline payment of retirement benefits.
According to Section 59 (1) states that, ‘The assets of the Fund shall only be invested in accordance with this Act and any other law in force in order to maximise returns on investment for the Fund’.
“We shall hold further consultations on this provision. The commercial aspect in the Bill will kill its objective. At some stage, we might be forced to delete this provision,” Onzima said.
Onzima also asked the minister to look closely into the provision on suspense accounts saying that the NSSF management was accused of mismanaging funds under the suspense accounts.
“We request you to take into consideration problems faced by the NSSF with suspense accounts. Is there a provision to look for those beneficiaries after the contributors have died? Is there a provision to see how such beneficiaries access the pension?” Onzima asked.
The legislators also cautioned the minister against giving the board of the Pensions Fund un-regulated powers saying this may lead to mismanagement of the Fund.
Hon. Baatom Koryang (NRM, Dodoth West County) however, said that allowing the board members to borrow from contributors’ funds will provide an avenue for mismanagement of the Fund.
“The risk with this is that some board members may be unscrupulous and will mismanage the contributors’ funds. Why would the board borrow from a fund that members are contributing to?” he asked.
Muruli Mukasa said that currently, the public service pension scheme under the Pensions Act, Cap.286 presents a number of challenges relating to its governance, accountability and sustainability owing to its non-contributory character.
“As a result of the sustainability challenge, the current public service pension scheme has continued to suffer shortfalls in funding which ultimately translate into accumulated pension and gratuity arrears for pensioners,” said Muruli Mukasa.
He added that the delayed payment of pension has led to frustration of pensioners and eroded the confidence of the pensionable employees and the pensioners.
“These arrears will continue to accumulate over the years if no reform is undertaken. There is therefore, urgent need to reform the current public service pension scheme in order to address the sustainability challenge and ensure pensioners are paid their retirement benefits in a timely manner,” Muruli Mukasa said.
The object of the Public Service Pension Fund Bill, 2023 is to establish the Public Pension Fund, provide for the establishment of the Public Service Pension Scheme and provide for collection of contributions and payments of retirement benefits.
The Bill further seeks to regulate the investment and custody of pension assets.