- November 14, 2022
- Posted by: admin
- Category: Current News
Pension penetration and coverage remain very low in the MEFMI region. In 2019, the African Development Bank estimated that only 5-10% of the population in sub-Saharan Africa (excluding South Africa) is covered by pensions. This means that old age poverty remains a big challenge. The need to expand pension coverage has ignited discussions on the need to reform the pension sector to address challenges such as poor governance, payments bottlenecks and lack of sustainability in order to make pensions more attractive and accessible.
As the debate about reforming the pension sector to improve penetration and coverage continues, one topic that has received a lot of attention is the need to give contributors access to their pension savings before retirement. It is argued that granting pension early access will help to incentivise employees to get pensions. In addition, they argue that under defined conditions such as the COVID-19 pandemic, early access will help to cushion contributors experiencing severe economic difficulties. However, if left open, early access may result in excessive leakage of assets from the pension system. This may compromise the desired pension outcomes such as coverage and adequacy. Additionally, early access may increase long-term pressure on the national social security infrastructure and reduce the pool of investments available for the development of the economy[1].
As part of efforts to raise awareness on the implications of granting early access to pension assets, MEFMI hosted a webinar on Mid-term access to pension assets on 25 October 2022. The webinar was delivered in English and Portuguese. The webinar was opened by Dr Kasekende, MEFMI Executive Director who emphasised the importance of the topic in the wake of the pandemic and the rising pressure for pension reforms in the region.
A total of 63 participants from 12 MEFMI member countries attended the webinar. The webinar enhanced the participants’ awareness of the pros and cons of allowing early access to pension assets in their jurisdictions. The speakers emphasised the need to properly weigh the advantages and disadvantages of early access. They also underlined that the framework for early access must be designed in a manner that is restrictive and does not threaten the primary objectives of pension systems. The participants are expected to use the knowledge gained from the webinar to design better policies to enhance pension penetration sustainably.
Two speakers presented at the webinar. These are, Ms Fiona Stewart (Lead Financial Sector Specialist, World Bank) and Mr Martin Nsubuga (Accredited Fellow and CEO, Uganda Retirement Benefits Regulatory Authority). Ms Miriam Musaali (Graduate Fellow and Director Legal and Board Affairs, Capital Markets Authority, Uganda) moderated the webinar.