Trade unions for pensioners have welcomed a government initiative to launch the long-term saving scheme (Ejo Heza), which will operate alongside the conventional pensions body, but called on the Rwanda Social Security Board to stop investing their money in loss-making ventures.
The long-term saving scheme that is open to people of all age groups and economic clusters, including those who are already in the pensions net, seeks to create a savings pool that will financially cushion citizens in the future.
The scheme comes to supplement the existing pensions scheme, which has struggled to grow subscribers, with RSSB only managing to have up to six per cent of the population in the pensions net, yet the country’s life expectancy is rising.
Actuarial studies show that by 2050 up to 10 per cent of Rwandans will be more than 60 years of age, up from five per cent.
“The government is calling on those that are not registered with the pensions body to join,” reads part of the statement from RSSB.
Besides supplementing the existing pension scheme, the new Ejo Heza is expected to expand economic gains, especially if the money is invested and managed well.
“This scheme is different from the existing pensions scheme, but we welcome it,” said Gasore Seraphin, the deputy secretary-general of Cotraf, a syndicate of pensioners trade unions in Rwanda.
He added that the main issue they have with RSSB is the fact that it continues to invest pensioners’ money in loss-making ventures, most of which have been construction projects that failed to generate profits.
“Some commercial buildings constructed by RSSB only have a 50 per cent occupancy rate, while other houses don’t have buyers years after completion,” said Mr Seraphin.
After encountering difficulties in getting buyers for apartments at the plush Vision City estate in Kigali’s Gaculiro, RSSB recently dropped the prices by 60 per cent for public servants.
Eligible public servants will be able to buy a two, three or four-bedroom apartment at the estate at a subsidised price, according to Ultimate Developers Ltd, a company fully-owned by RSSB.
A two-bedroom apartment will be sold at Rwf63,000,000, down from Rwf108 million. A three-bedroom will cost Rwf94,000,000 from Rwf163 million.
On plans by RSSB to increase pension contributions from the current eight per cent, Mr Seraphin said they have no issue with increasing contributions but about how they are invested.
He said RSSB plans to increase contributions based on the implementation of a minimum wage, which will come into force soon.
Pensioners welcome the increments in their benefits starting last year. Those who previously got Rwf5,000 in benefits got a 136 per cent increase, earning Rwf18,000.
In the new savings scheme, citizens in the first and second economic categories are required to save Rwf15,000 annually while the government contributes Rwf18,000.
Those in the third category will save Rwf18,000 while the government contributes Rwf9,000 for them. Those in the fourth category will save up to Rwf72,000 but the government will not contribute any amount for them.