Question 1: What are the functions of URBRA?
The functions of the Authority are to: Regulate and supervise the establishment, management and operation of retirement benefits schemes in Uganda, in both the public and private sectors; License retirement benefits schemes; license Custodians, Trustees, Administrators and Fund managers of retirement benefits schemes; Approve an Actuary and Auditor of any retirement benefit scheme; Protect the interests of members and beneficiaries of retirement benefits schemes including the promotion of transparency and accountability; Improve understanding and promote the development of the retirement benefits sector; Promote the stability and integrity of the financial sector through ensuring stability and security of retirement benefits schemes; Ensure sustainability of the retirement benefits sector with a view to promoting long term capital development; Advice the Minister on all matters relating to the development and operation of the retirement benefits sector; Implement Government policy relating to relating to retirement benefits schemes;\ Promote public awareness of the retirement benefits sector; and any other function conferred upon it under the Act.
Question 2: What is Uganda Retirement Benefits Regulatory Authority (URBRA) Act 2011?
Answer: An Act to: Establish the Uganda Retirement Benefits Regulatory Authority (commonly referred to as URBRA or Authority), an institution that will regulate the establishment, management and operation of retirement benefits schemes in Uganda in both the private and public sectors; To supervise institutions which provide retirement benefits products and services; and to protect the interests of members and beneficiaries of retirement benefits schemes.
Question 3: How is URBRA Financed?
Answer: Section 19 of the URBRA Act states the funds of the Authority shall consist of: Compulsory levies; License fees. Money appropriated by Parliament for the purposes of the Authority; Grants, gifts or donations from Government or other sources made with the approval of the Minister; and Any other fees charged for services and activities rendered by the Authority under this Act.
Question 4: Who are the service providers and what are their functions?
Answer: The service providers in the retirement benefit sector include: Custodians; Trustees; Administrators; and Fund managers.
Question 5: Why does URRBA charge a Levy to Schemes?
Answer: In order for the Authority to be independent and effectively regulate the sector, Parliament set a provision for levying in the view that over the longer term the Authority should be able to finance its operations.
Question 6: Is URBRA another scheme like National Social Security Fund (NSSF)?
Answer: No. URBRA is not a fund or a retirement benefits scheme, it is the Regulator of retirement benefits schemes. The NSSF, on the other hand, is a retirement benefits scheme and must comply with the URBRA Act and the regulations made under the Act. URBRA regulates the NSSF.
Question 7: Who is a Fiduciary?
Answer: In the context of the retirement benefits sector, Trustees and all other service providers are fiduciaries and must, in the management of retirement benefits schemes: Act with due care, skill, diligence, good faith and prudence, and shall avoid misleading and deceptive acts or representations; Act in the best interest of the scheme members and beneficiaries; Ensure that all decisions regarding the scheme comply with scheme rules; and Act with impartiality in respect of all members and beneficiaries of the scheme.
Question 8: The URBRA Act advocates for separation of roles of fund management, custody and administration, all these service provision comes at a cost, wont these costs erode members contribution?
Answer: To ensure transparency and accountability, its good practice to separate the roles in the management of retirement benefits schemes for adequate reporting. The Board of trustees, as the governing body of a retirement benefits scheme, should ensure that the scheme is managed in the best interests of the members and beneficiaries. This requires the trustees appointing service providers on a transparent and competitive basis to perform specific functions to specific standards in an effective and efficient manner. As a result of the good governance that arises from this arrangement members and beneficiaries can expect: Proper safe keeping of members savings and assets of the scheme by the custodian; Prudent investment management of scheme assets by professional and experienced Fund managers; Efficient administration and accurate record keeping by the Administrators or those managing the scheme; and Independent reporting on the management and financial aspects of the scheme (Auditor, Actuary). Evidence from other jurisdictions has shown that the benefits of segregating the roles far outweigh the cost resulting in better performance and reduced fraud and hence increased benefits to the members contributing to a retirement benefits scheme.
Question 9: What is URBRA doing to reduce the cost of administration of Retirement Benefits Schemes?
Answer: There are reforms taking place in the retirement benefits sector that seek to enhance competition. In future, individual members will be able to assess the performance and cost of different schemes, and transfer their savings and contributions to a scheme of their choice. This will result in members choosing those schemes that are well managed and provide value for money. Another initiative that is being spearheaded by URBRA is the umbrella arrangement, where schemes, employers and individuals choose to save under a pooled arrangement, thereby benefiting from economies of scales. This means that individual entities do not each have to setup retirement benefits schemes and appoint service providers, and thereby reducing costs. This arrangement is particularly beneficial to small schemes and employers where the cost of administration can be extremely high compared to the level of contributions.
Question 10: Will schemes be required to seek prior approval from the Authority when paying benefits to individual Members?
Answer: No. URBRA is the Regulatory Authority for the industry and will not be involved in the day-to-day running of the affairs of schemes, it only supervises the overall framework through which these schemes are run. The payment of benefits should be in line with the scheme rules approved by URBRA.
Question 11: What is the distinction between Regulation and Supervision?
Answer: Regulation refers to the legal framework that govern the retirement benefits sector, such as the URBRA Act and regulations made thereunder; whereas supervision is the activity of enforcing compliance with the legal framework.
Question 12: Why does URBRA need to regulate and supervise the Retirement Benefit Sector?
Answer: Saving for retirement is an important and long-term commitment and individual savers need to be assured that their life long-term savings are safe and secure. URBRA supervises and regulates the sector on behalf of and in the best interest of savers. Supervising the sector ensures that schemes are managed properly, savers have access to timely and relevant information, reduces the risk of fraud.
Question 13: How are Retirement Benefits funds supposed to be invested under the URBRA Act?
Answer: The funds and assets of a scheme are invested, in accordance with the maximum percentages and asset classes as listed below: 5%-Cash and demand deposits in institutions licensed under the Financial Institutional Act 2003 or other similar institutions licensed in East African Community. 30%-Fixed deposits, time deposits and certificates of deposits in institutions licensed under the Financial Institutions Act 2003 or other similar institutions licensed in the East African Community. 30%-Commercial paper, corporate bonds, mortgage bonds and asset backed securities and collective investment schemes approved by the Capital Markets Authority 80%-Government securities in the East African Community 70%-Shares of companies quoted in a stock exchange in East Africa and collective Investment Schemes approved by the Capital Markets Authority 30%-Immovable property in Uganda, real estate investment trusts and property unit trust approved by the Capital Markets Authority 15%-Private equity in the East African Community 5%-Any other assets classes approved by the Authority
Question 14: Why is it necessary to have investment regulations and guidelines?
Answer: The URBRA Act provides general rules and regulations in the sector while the guidelines and policies are developed to implement the URBRA Act and they provide guidance and govern the operations of the sector. Investment regulations and guidelines therefore only provide maximum exposures for the broad asset classes that a scheme can invest in. These regulations and guidelines are only meant to ensure adequate diversification and they do not mandate investment in a particular asset class. Schemes are free to choose which particular broad asset classes they invest in or which to exclude, depending on their specific liability profile. Further, the schemes retain full discretion as to which investments to make within any particular asset class.
Question 15: Who says I will consume my money if it is paid to me? I am perfectly capable of investing the money myself and catering for myself in retirement thank you very much!
Answer: Surveys carried out show that many people who are paid their benefits when they change jobs utilize them on consumption expenditures such as cars, household goods, weddings etc. Statistics also show that accessing benefits when changing jobs, results in many workers having very low benefits at retirement despite having saved for 30 to 40 years. Further, individuals are unlikely to have any knowledge of investment management and are unlikely prudently invest their own savings.
Question 16: How do I submit a complaint to URBRA and what do I expect?
Answer: A complainant is advised to come to URBRA Offices and fill a complaint form with assistance with URBRA staff, and submit supporting documents. A complainant may get someone else to lodge the complaint on his/her behalf for example a lawyer, accountant or trade union representative, or a friend or family member so long as they have the complainant’s written consent to represent him/her. The process is as follows once the complaint has been lodged: i. The Authority receives all documents required and opens a file for the complainant; ii. The Authority writes to the complainant acknowledging receipt of the complaint and supporting documentation; iii. The Authority also writes to the party the case is being brought against and sends a copy to the complainant; iv. The complainant will receive a copy of any further communication between the Authority and the party the case is being brought against; v. In some cases the Authority seeks the guidance of the Solicitor General to give an opinion on legal issues involved. vi. The authority works out appropriate mechanisms for resolving the complaint in the most expeditious way including conducting meetings between the parties involved or simply providing the appropriate information. Please note that this process is transparent and free of charge.