The Government will soon set up a long-term National Public Savings Scheme to help majority of the country’s population working in the informal sector save for future investments and retirement, the Minister for Finance and Economic Planning has said.
Amb. Claver Gatete was addressing members of the Lower House, yesterday, while making a presentation about the scheme in order to lobby for their support in expeditiously passing a Bill that will establish the structure.
Approved in principle by Parliament in November last year, the Bill governing the establishment and organisation of a long-term National Public Savings Scheme, a facility that will seek to collect savings from different Rwandans within and outside the country, still lays in the House awaiting final approval.
Yesterday’s session with the MPs intended to explain the concept of the plan to the legislators to improve their understanding of the scheme and help fast-track their work to analyse and finally pass the law governing it.
“There needs to be a flexible system of saving and people need to start saving as soon as possible. For those who already have pension plans with the Rwanda Social Security Board (RSSB), the new scheme will be a supplementary pension plan. The whole idea is to be able to provide Rwandans with essential needs in the future,” Gatete said as he explained the concept for the saving and pension scheme.
The system, which targets to mobilise at least Rwf90 billion in its first three years, seeks to accommodate as many adherents as possible, both from formal and informal sectors, 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 their seed money to carry out their investments or as pension benefits when they retire.
Subscription to the fund will not be compulsory for anyone and deposits will be made to an institution that will be managed by investment management professionals under the supervision of the central bank.
But massive campaigns will be carried out across the country to ensure that as many Rwandans as possible save with the scheme in order to secure their future instead of leaving the chance to planned and happy retirement to only the current 10 per cent of the population who are salaried professionals in the public and private sector.
Unlike RSSB, which currently collects pension savings from salaried professionals, Gatete said the new savings scheme will be quite unique given that it will combine savings and pension, hence leaving all the funds available to benefit contributors at any stage of their lives.
The minister said that the scheme will also be essential for the country’s economy because it will help mobilise funds that are needed by banks to be provided to people with different investment projects.
“The economy cannot grow without savings. In Rwanda, there is a lot of spending going on and really less savings. We need to change that and start saving as well,” he said.
An explanatory note accompanying the scheme’s draft law indicates that the proposed long term savings scheme will benefit its contributors through attractive returns on their savings as a result of pooling savings and investing as well as safe investment vehicles due to professional investment managers.
The contributors will also benefit from government co-contribution to the long-term savings scheme for its beneficiaries on the basis of the level of their income and the amount of savings and they will be eligible for free life insurance and funeral expenses granted by the Government.
Gatete said the Government will move swiftly to set up the scheme as soon as Parliament passes the law governing it, telling journalists shortly after his presentation that the plan could be set up in the next fiscal year that starts in July.
The Speaker of Parliament, Donatille Mukabalisa, hinted at the MPs’ intent to swiftly give a final approval to the scheme, saying at yesterday’s session that “without such a framework many Rwandans will become a burden for the country in the future”.
The Bill governing the establishment and organisation of the scheme is under review at the parliamentary committee level before it can be tabled back in the House’s plenary for final approval.