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MPs Reject Plan To Lend Out Pension Funds

Deputy Speaker Tayebwa

The proposal by the Ministry of Public Service to lend out money meant for payment of pension and gratuity was rejected by MPs, arguing that such a move would erode the scheme of its funds.

The recommendation was made in Parliament’s Public Service Committee on their report on the Pension Fund Amendment Bill 2023, where Government had proposed to give the Board of the Pension Fund powers to lend out money, so as to grow the scheme, but the proposal was rejected.

“The Committee observed that allowing the Board to borrow will expose the public service pension scheme to several risks which may end up eroding the fund since the reasons for borrowing have not been clearly stipulated. To ovoid exposing the scheme to the risk of high interest rates and other risks arising from borrowing, the Board should not be allowed to borrow,” the report reads in part.

Lawmakers on the Committee also expressed skepticism on the proposal in Clause 30, where the Ministry of Public Service had proposed provision of social security number to every member upon registration, pointing out that the official identification of Government is National Identification Number and this is unique for everyone and more so it is not transferable or assignable to anyone else and is becoming the unique identifier for Ugandans.

The MPs also cited past corruption and fraud incidences that have rocked the Pension Fund, noting that in the past, such an initiative was undertaken, but the system was subjected to manipulation and corruption.

“The Committee recommends the use of National Identification Number to the employees for the purpose of collecting, recording and processing, information on social security benefits for each member,” read in part the report.

However, Parliament deferred consideration of the report after Deputy Speaker Tayebwa revealed that the recommendations made by the Committee altered almost 60% of the original Bill tabled by Government, prompting Government to withdraw the Bill and incorporate the changes proposed by the Committee and table a fresh bill before Parliament.

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