As debate on new Pension Bill continues in Parliament, growing calls among pensioners to raise benefits rage on.

Rwanda Pensioners’ Association (ARR) is pushing for an increase in pension benefits, pointing to the rising cost of living.

Modest Munyuzangabo, the president of ARR, said there are pensioners who draw as little as Rwf5,200 monthly benefits and a Rwf500 fee is deducted from that meagre pension.

"There are even withdrawal charges. To make matters worse, pensioners do not benefit from social protection initiatives like Ubudehe (social stratification) and Girinka (cattle stocking programme) because they are presumed to be getting enough pension,” he said.

ARR argues that a public servant holding a bachelor’s degree, who earned Rwf28,538 in 1996, now earns at least Rwf200,000, which means their salary has increased seven-fold and purchasing power increased 17 times as, for instance, a bag of cement was Rwf4,600 in 1996, but now it costs Rwf11,500.

However, a retiree who received Rwf28,538 monthly pension benefits in 1996 had an increase of 15 per cent in 2002, which means they get Rwf32,819.

Officials at AAF argue that the purchasing power of such a pensioner reduced drastically.ARR deems this a loophole in social security services.

"If a social security board makes investment in sustainable and viable projects, it can ensure the welfare of pensioners,” Grégoire Karambizi, second vice-president of ARR, said, urging Rwanda Social Security Board (RSSB) to consider increasing workers’ contributions.

"The contributions of workers can be used in such investments and when they retire, the board would be taking portions from the accumulated funds and distribute them among pensioners.” Pensioners say RSSB should strive for their welfare by adjusting pension benefits in line with the cost of living.

But Emmanuel Kayitare, director of pension and pre-retirement benefits department at RSSB, said any proposal to increase pension benefits has to look at the source of funding.

"We have to consider the source of those benefits. You might think you have a lot of money on your account, but if you do not consider the amount you owe the beneficiaries, you might be wrong,” he said.

In the 2013/2014 financial year, RSSB disbursed Rwf12 billion to 36,496 beneficiaries.

A 2013 report by Government Actuary’s Department (Gad) recommended that Rwandan employees should contribute 10 per cent instead of current 6 per cent to pension scheme if benefits are to increase and for the pension scheme to be sustainable.

A UK-based firm specialised in pension and insurance matters was contracted to conduct a survey partly to respond to growing calls for increased benefits.

The report, however, poured cold water on the prospect of increasing pension benefits after it placed present value of the projected expenditure in respect of accrued benefits over 50-year period at an estimated Rwf1,279.7 billion compared to assets of the scheme, which were valued at Rwf301.6 billion.

The report concluded that increasing benefits was not viable with current contributions.

"For the scheme to be fully funded, additional contributions would be required from employees, employers or the government, to make good the current shortfall between existing assets and the benefits accrued to-date,” the report said.

Six per cent contribution rate was established in 1974 by a Presidential Order.

Kayitare said since then, pension benefits have been revised twice; in 1981 and 2002.

The raise followed the amount of pension one was getting, with the lowest having over 150 per cent and the highest 66 per cent of increment in 1981, and 30 per cent and 5 per cent in 2002.

Contribution rates compared

The contribution rate to social security in Rwanda is 6 per cent of the worker’s salary, 14.4 per cent in Burundi, 20 per cent in Tanzania, 27 in Kenya and 15 per cent in Uganda.

"It is clear that the contribution in Rwanda is very low compared to the rest of the region and the whole of Africa,” Kayitare said.

However, he argued that when it comes to pension formula, Rwanda has the most generous regime in the region as after one has contributed to the pension scheme for 15 years, they get 30 per cent of their gross salary and each year after 15 years, one gets 2 per cent of their gross salary added to their monthly pension benefits.

"If one has worked for 40 years contributing to the scheme, they get 80 per cent of their gross salary because the net salary would be like 70 per cent after subtracting taxes and other duties. This means our system is open and has no limits,” Kayitare said.

"If one has worked for 30 years earning Rwf40,000 and gets promoted to earn Rwf1 million, it is the latter which is considered.”

Marie Rose Mureshyankwano, the chairperson of the parliamentary Standing Committee on Social Affairs, took note of the fact that the pension law currently under review stipulates that RSSB has to carry out actuarial study every five years to assess the state of the fund to ascertain whether contributions can be increased or reduced.

"Increasing pension benefits also will depend on the actuarial results,” she said.

Jean-Pierre Uwimana, a lecturer at the School of Journalism and Communication, University of Rwanda, said there was no problem in increasing pension because the contributions will get back to the worker.

The Chief Executive of Rwanda Development Bank, Alex Kanyankole, said the increase in contribution is necessary.

"RSSB used expert actuaries for relevant analysis. Things must move with times such that employees and employers should understand and adopt that analysis, because the intention is the benefits in the retirement period. There is no point in giving any contributions, which will not help you during retirement,” he said.

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