A pension increase considered as high cost of living pressure rises

For pensioners receiving as little as Rwf13,000 in monthly benefits, it is hard to meet their basic needs such as meals, amid the current high cost of living, according to the president of Rwanda Pensioners’ Association, Dorothée Uwimana. Small pension benefits that do not match the rise in the cost of living is a reality that the Rwanda Social Security Board (RSSB) recognises, and is mulling over a possible solution. ALSO READ: ‘Rising cost of living’ worries pensioners “We are aware of the inflation, in fact, the good news is that we have been working on that for about a year,” RSSB CEO Regis Rugemanshuro told The New Times. Rugemanshuro pointed out that an actuarial study was completed early 2022, and appropriate implementation of its recommendations was being considered to ensure that it does not create economic disruptions. An actuarial study is a type of evaluation of a pension fund's assets versus liabilities to determine the funded status of a pension plan, risk management and governance, for sustainability purposes. Meanwhile, he indicated, the final decision on implementation of the study's recommendations has not yet been reached, and it involves ministries, parliamentarians and other government stakeholders. “We are not at the point where we can put it in implementation, but it’s being discussed so that anyone listening to us is assured that we are aware. We are working on it, we want to get the right answer and make sure it’s implemented the best way without creating any other economic disruption,” he said. “What’s sure is that the particular point about potential increment on their (pensioners’) current benefit is seriously being considered,” he said. The 2015 law governing the organisation of pension schemes in Rwanda provides that a public entity in charge of the pension scheme shall carry out an actuarial study for the pension scheme at least once every five years. Where the actuarial study shows a possible negative impact on the economy, the amount of contributions shall be increased based on the legal provisions. Based on the findings of the actuarial study, pension benefits may also be increased, the law stipulates. The latest pension increase was made in 2018. Among others, it more than doubled the minimum pension to Rw13,000 (from Rwf5,200). Why another pension increment is needed The president of Rwanda Pensioners' Association, told The New Times that the pension increase effected five years ago was minor for most pensioners, especially as the cost of living went very high. Given that a kilogramme of Irish potatoes is around Rwf1,000, that of beans is more than Rwf1,000; sweet potatoes and cassava about Rwf600 a kilogramme, Uwimana said that Rwf13,000 could not suffice for a pensioner’s meals per week. ALSO READ: Senators seek increased pension benefits amid rising cost of living Yet, a kilogramme of Irish potatoes was less than Rwf10 just before 1990, and a kilogramme of meat was about Rwf100 (but it is now over Rwf4,000), which indicates how the value and purchasing power of the Rwandan franc declined over time. “Pension should be increased urgently to address the poor living conditions of some retirees, which stems from small benefits and high prices of basic needs on the market,” Uwimana said. She indicated that retirees who are most affected by the current situation are those who worked relatively long ago, citing people who held secretary-general positions about 30 years ago. “In 1995, a secretary-general (in a given entity) was getting Rwf50,000 a month and was well-off, leading a decent life [because the value and purchasing power of the franc was high]. But now, they are earning a pension of Rwf30,000, or Rwf20,000 a month, which is too little to make ends meet [given that the franc depreciated],” she said. ALSO READ: Senate tasks govt to address inflation, franc devaluation Performance of public pension fund According to the monetary policy and financial stability statement issued in September by the National Bank of Rwanda, assets of the public pension fund – managed by RSSB – grew by 16 per cent from more than Rwf1.2 trillion in June 2022 to more than Rwf1.4 trillion in June 2023. Data from RSSB performance highlights for the 2022/2023 financial year show that pension and occupational hazards benefits paid out to members amounted to Rwf45.9 billion, from Rwf41.3 billion in 2021/2022, and Rwf30.5 billion in 2019/2020.

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A pension increase considered as high cost of living pressure rises