Rwanda Social Security Board says the small amounts of money, like Rwf2,000 or Rwf5,000 a month, that parents save for their children in Ejo Heza long-term savings scheme could make them ‘millionaires’ during their old age, according to the scheme manager of the Pension board.

Speaking to The New Times, Augustin Gatera, Head of Ejo Heza Department at RSSB said the sooner one starts contributing to Ejo Heza, the greater benefits they will get upon retirement – when they turn at least 55 years-old.

"We have savings and pension calculator that show if you start saving Rwf2,000 per month for a 3-year old nursery school child, he/she will have Rwf51 million in accumulated savings when they turn 55 years, and a monthly pension of Rwf350,000,” he said, indicating that the amount will be possible as a result of the primary savings and accrued interests over time.

"That amount increases to Rwf130 million, allowing them to get Rwf800,000 monthly pension, if you save Rwf5,000 for your three-year child on a monthly basis, until they are 55 years old. And, if you save Rwf10,000 for your child per month, they will have Rwf261 million, and a pension of Rwf1.7 million per month, when they turn 55,” he said.

Currently, Gatera said the scheme provides about 12 per cent annual interest rate on members’ savings, pointing out that the Ejo Heza funds are invested in Government treasury bonds for them to generate higher returns.

Meanwhile, he explained that the generated profit is not directly given to the members, rather, added to their savings for compounded interest.

He indicated that it is children and the youth who have more benefits in Ejo Heza as they will be able to get significant savings by saving small amounts over a long period "and the savings will be important for them in life.”

This, he said, is the reason why the scheme management is going to schools to carry out awareness campaigns for parents to pay contributions to it for their children.

Savings for your child in Ejo Heza is voluntary

Meanwhile, Gatera said schools are not allowed to include Ejo Heza savings on the requirements that parents have to fulfill for their children to be admitted, observing that saving for children in this scheme is not compulsory.

The warning comes after some schools in the City of Kigali told parents to start saving for their kindergarten and primary school children in this scheme – which the Government said is chiefly meant for pension access for people in the informal sector.

According to the Law establishing the long-term savings scheme and determining its organisation, which was published in the Official Gazette of August 18, 2017, a child below the age of 16 years can be a beneficiary of a long-term savings scheme account opened by his/her parent or guardian.

But, some parents said they are formal sector workers and have been contributing to the related pension fund also managed by RSSB, wondering why they have to save for their children who have not yet completed even primary education.

One of the parents who has a child in a nursery (pre-primary) education at Kigali Christian School, told The New Times, on condition of anonymity, that the school asked them to fill a form to start paying contributions to Ejo Heza for their children.

"What interests a parent the most is to have their child get education. And, that is why I took education insurance for my children,” he said, arguing that saving for retirement or pension benefits should be for people who have started working.

The New Times wanted to get in touch with the school on why it urged parents to make savings for their children in the scheme, but the school had not given an answer by press time.

Jean Claude Murindankiko, Director of SOS Children’s Village school, told The New Times that local leaders have encouraged parents to save for their children in Ejo Heza, with a view to boost the savings culture and ensure the future of children’s welfare.

"When a person starts making such savings earlier, which concerns every Rwandan, they go into retirement when they have considerable assets... But, we do not make it mandatory for parents to save for their children in Ejo Heza, rather sensitise them about the importance of such savings so that those who want it can embrace it,” he said.

Gatera said that Ejo Heza management is putting more efforts in sensitising people to embrace the scheme and understand the advantages of starting saving at an early age.

So far, the scheme has 2.4 million members who have saved 38.5 billion, Gatera disclosed.

Information from RSSB suggests that only about 8 per cent of Rwanda’s workforce – estimated at 5.4 million – has access to long-term savings through pension schemes, while the remaining – about 92 percent, including motorcycle taxi operators, farmers, and some masons, are excluded.

This situation implies that once they are unable to work due to old age, injury or diseases that inflict permanent disabilities on them, they will have nothing to fall back on for a living.