Pension sector revenues up 26pc
Revenues in the public pension sector grew significantly in the first six months of this year, according to central bank figures, suggesting that more people are saving money through pension schemes.
In the period under study, revenues in public pension grew by 26 per cent driven by many new employers who registered their companies as well increased disbursement of employees’ contributions.
Data from the central bank indicate that assets excluding private pensions recorded a positive growth trend, reaching Rwf251 billion in June 2012 from Rwf231 billion in June last year, an increase of 9 per cent.
Angelique Kantengwa, the Director General of Rwanda Social Security Board also attributed the trend to increase efforts by the body to mobilise employers to remit their employees’ contributions.
RSSB has in the past conducted awareness campaigns, sensitising employers to remit workers’ contributions. Measures including confiscating company cars or other valuable assets were introduced to curb the widespread failure by some companies to remit employee contributions.
Benefits paid to members grew by 14 per cent from Rwf7 billion in June last year to Rwf8 billion in June this year.
“This is also with efforts by RSSB in terms of enforcement to ensure compliance by employers to pay their employees pension and medical contributions,” she said.
According to the RSS Boss, major drivers of increase in assets were long term deposits in real estate and investment in equity.
However, pension coverage is still low compared to middle income economies of at an average of 25 per cent.
Rwanda’s pension coverage range between 8 and 9 per cent of the working force because a big part of the population still works within informal sector targeting to increase compliance of paying remittances to 60 per cent by 2015.
“This is changing slowly as RSSB is creating new ways of contributing via cooperatives,” she said.
Government also expects to save more once the pension bill in Parliament is approved where provident fund and private pension scheme will be introduced.
“Positive prospects are expected after the enactment of the new pension law that will give rise to the establishment of private pension schemes,” a statement reads in part.
The central bank has also set up Financial Stability Committee (FSC), a committee to monitor the stability of the financial sector with a strong focus on the pension and insurance sectors.
The committee created is expected to promote stability of the country’s financial system by carrying out periodic assessment of the pensions and insurance sector to mitigate risks.
The committee pledges to continue reforms in pension, insurance, banking and microfinance institutions in order to cater for new market developments.