Activists call for strategies to address gaps in EjoHeza saving scheme

For a member of the long-term savings scheme, EjoHeza, retirement benefits would be limited to 20 years. Yet, that is only possible when one has contributed at least Rwf4 million to this plan, under the current legislation. These two provisions in the scheme, mainly meant for pension for the many Rwandans in the informal sector, have attracted attention from entities working to promote the rights and welfare of the elderly, who want them revised as they could have adverse effects on their retirement benefits. EjoHeza long-term savings scheme is administered by the Rwanda Social Security Board (RSSB). It was established to extend pension services to workers in the informal sector not covered by the mandatory pension fund, which is also under the management of RSSB. According to the law establishing the long-term savings scheme and determining its organisation that was enacted in 2017, benefits due to the member are provided under conditions including being at the age of at least 55 years. It provides that an Order of the Minister in charge of finance determines modalities for granting benefits to the member. The Ministerial Order determining modalities of granting long-term savings scheme benefits was published in 2018. It states that where the amount saved by a member aged at least 55 years and related interest amount to or have exceeded Rwf4 million, the member is entitled to an allowance equal to 25 per cent of the total amount. The remaining amount is paid monthly over a period of 20 years. When the amount saved by a member aged at least 55 years and related interest are less than Rwf4 million, it added, they may opt for a lump-sum allowance equal to their full accumulated savings plus accrued interest. The social protection gap after 20 years of pension benefits Elie Mugabowishema, Founder and President of Nsindagiza, an organisation striving for the welfare of the elderly, told The New Times that older people aged 75 and above are the ones who have ‘major issues’ and need more support to ensure improved living conditions. For him, people above the age of 75 are in most cases widows/widowers, or all of their children got married and they stay alone, while they are prone to old age ailments and unable to work. “Allowing benefits [for 20 years] to people aged up to 75 years would not be providing a solution to the existing problem. It would not be an effective old-age initiative. That would be a huge gap,” he said. If the scheme is intended to support people in the informal sector, Mugabowishema said, people who contributed to it should have access to pension benefits as long as they are alive. Concerning this stipulation, Jacques Rutsinga, EjoHeza Mobilisation Manager, said that it was informed by a study carried out, but many people wondered what would happen after the 20 years of entitlement to old-age benefits. So far, he said that the issue can be addressed by extending the age at which the member starts getting their benefits. “We propose that though the law provides 55 years [of age at which a member of EjoHeza can start getting benefits], people who are still energetic can [continue working] and start receiving benefits when they are 60 or 65. As a result, they take the benefits [for the 20-year period] until the age of 80 or 85,” he said. He pointed out that the 20-year limit was reached based on the at least Rwf4 million savings with a view that the member does not get too small a benefit to live – explaining that the payout would be around Rwf18,000 per month throughout the considered period. “But, it is understandable that the law was enacted on behalf of Rwandans. It can be amended anytime the need to support them arises,” he said. Mugabowishema said that the minimum contribution to EjoHeza is Rwf1,500 per month. This is the case of the most vulnerable people in the first Ubudehe category, to whom the Government offers a monthly financial support of Rwf1,500 [for encouragement to join the plan]. “So, even though such a monthly contribution – totalling Rwf3,000 – to the scheme is maintained, it would be Rwf36,000 per year, and Rwf3.6 million in 100 years [all things being constant],” he said. “Thus, it is difficult for one to reach such a contribution [Rwf4 million],” he said, pointing out that those who would manage to make it could be businesspeople, or the relatively well-off people. MP Angelique Nyirabazayire told The New Times that the Rwf4 million requirement was too high for the people with small income and contribution. “The minimum contribution to the scheme is Rwf1,500 per month. So, when can the member making such a contribution reach Rwf4 million? This provision should be revised,” she said. Minimum contributions could be halved Meanwhile, Rutsinga told The New Times that the Rwf4 million contribution requirement is likely to be reduced by half to Rwf2 million soon, without specifying the date. “Many people exposed that such money is a lot, and suggested that it would be okay if it is reduced to Rwf2 million,” he said. According to the Monetary Policy and Financial Stability Statement of March 2022 by the National Bank of Rwanda, total contributors to EjoHeza increased by 168 per cent from over 531,000 to over 1.4 million as the scheme embarked on an aggressive awareness campaign. That development, it showed, led to a 139 per cent increase in contributions to the scheme from Rwf9.7 billion in December 2020 to Rwf23.2 billion in December 2021. Estimates from RSSB suggest that as of 2019, only 8 per cent of 5.4 million active Rwandans in the working age bracket had access to long-term savings through pension schemes. The remaining 92 percent, including motorcycle taxi operators, drivers, masons, farmers and people involved in handcrafts, were excluded from pension schemes.

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Activists call for strategies to address gaps in EjoHeza saving scheme