Lawmakers have approved, in principle, the Bill governing the establishment and organisation of a long-term National Public Savings Scheme, a facility that will seek to marshal savings from different Rwandans within and outside the country.

The scheme, which targets mobilise at least Rwf90 billion in its first three years, was received with mixed reactions from lawmakers whose queries moved from how it will work with ordinary structures, membership requirements to overall expectations.

The long-term savings scheme, among others, seeks to accommodate as many adherents as possible, both from formal and informal settings, to workers and members of the Diaspora. Members will be able to deposit any amount of money as savings that can be used later as social and or pension benefits.

Subscription to the fund will not be compulsory for anyone and deposits will be made to an institution that is yet to be created, according to the Minister for Finance and Economic Planning, Amb. Claver Gatete, who presented the Bill to the Lower House.

The savings, according Gatete, can be used later as pension benefits or investment capital for members of the scheme.

The lawmakers, while analysing the relevance of the Bill, asked the minister about the safety of the savings should they be invested, its cohesion with existing institutions that have been involved in similar services, and whether benefits should factor in inflation in the future, will the subscriber start benefiting from their savings in the future.

"We have seen cases where pensioners claimed the money received is not calculated using the actual currency rate, how will the new fund operate to ensure they factor in inflation?” asked MP Jean Marie Vianney Gatabazi.

He added: "There will be need for more seriousness in the management of the funds to avoid investment risks although we will need to know how this will work alongside other institutions like banks, insurance companies, and Rwanda Social Security Board that we know are providing these services.”

Queries

Lawmakers also queried expected outcomes should the scheme start making benefits and modalities for members to share profits.

"How are the benefits accruing from the investments going to be shared by members of the scheme? The government will need to convince us how people will subscribe to the scheme if indeed it is not compulsory,” said MP Suzanne Mukayijore.

Minister Gatete said the aim of the savings scheme is to mobilise 90 per cent of members of the informal sector to be giving contributions that can later be used as pension benefits from the age of 55 while there is no specific amount stated to be deposited by members of the scheme.

Responding to MPs’ queries, Minister Gatete said there will be no limit to how much a willing member can deposit with the scheme although, he added, the client cannot immediately claim back savings before the stipulated time.

"Part of the funds will be used as pension benefits - which was our main focus – simply for people who would have attained unproductive age, but that does not mean that the subscriber to the scheme cannot ask that another part of their savings be used in investment,” Gatete said.

The minister added that the savings will have incentives attached where, depending on the members rate of deposits, they can make some quick profits, on top of other expenses like funeral costs that will be accorded should a member die.

"As for inflation, the deposits will grow alongside indexation rate, thus members will stand assured that the value will be tabulated to the rate of inflation of the currency,” Gatete said.

Indexation benefits are provided for capital gains on assets held for long-term, according to the asset category.

According to Gatete, the Government has already set up a roadmap for mobilisation that will start as soon as the draft law is assented to.

While previously the percentage of saving was at less than 10 per cent, officials said failure to establish such schemes and engage private members in insurance business was a challenge to a country whose intention was to marshal an appropriate level of savings to finance development activities.

The draft law, which was endorsed by Cabinet on September 13, will now be forwarded to the parliamentary Standing Committee in charge of Budget and National Patrimony for further scrutiny.

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