The monopoly enjoyed by the Rwanda Social Security Board (RSSB) as the sole social security provider will soon end as the National Bank of Rwanda (BNR) moves to licence private pension schemes next month.
By licensing private pension schemes, the bank aims at boosting savings mobilisation in the country and enhancing access to finance, according to Peace Uwase, the BNR director general for financial stability.
The move follows the approval of a new pension law by Parliament to fully liberalise the sector over a year a go in February, breaking the long-running monopoly that has been enjoyed by RSSB.
Though the industry had not yet been fully opened up, there have been over 50 private pension schemes managed by insurance firms, according to a survey conducted by the central bank.
The new law gives such schemes an opportunity to manage pension funds as fully-fledged social security service providers.
“We have opened the doors for the licensing process to start…we expect to start receiving applications by November and continue the process up to the end of the year,” she said.
Uwase was speaking on the sidelines of the presentation of the quarterly monetary policy and financial stability statement at the central bank head offices on Tuesday.
Experts say the move will significantly improve the quality of services and terms offered in the market as clients will now have alternatives.
In August this year during the monetary policy and financial stability statement, the central bank governor, John Rwangombwa, said the licensing pension regulations that outline the licensing and operating standards, had been sent to the Prime Minister’s Office for publication in the official gazette.
In December last year, the Cabinet approved a ministerial order determining the modalities of registration under mandatory pension schemes, as well as an order determining the modalities of application and benefits payment under mandatory pension scheme.
About the new pension law
The new pension law also increased the minimum retirement age from 55 to 60 years, while the right to membership to a mandatory pension scheme was extended to self-employed persons below 50 years, and some limitation in the old law were scrapped.