Our pension system will go broke in 29 years. What should we do?

RSSB this. RSSB that.

It seems like the venerable Rwanda Social Security Board (formerly known as Caisse Sociale du Rwanda) is more often than not in the news for the wrong reasons.

The swanky RSSB headquarters in Kigali:is this where our money goes?

The swanky RSSB headquarters in Kigali:is this where our money goes?

Whether because buildings contractors are suing the body in connection with the multi-storied Pension Plaza or people are complaining that their hard earned monies are being used to build luxury estates that no one can afford (RSSB’s Vision City, where houses will range from $179,000 to $590,000 a pop, is a great example).

I won’t even go into the alleged criminality of its former boss, Harvard-educated Angelique Kantengwa.

However, despite all the negative press, the institution plays a hugely important role. It is often the only thing separating the vast majority of retirees from absolute poverty.

I’m only 34, so the idea of retirement is the furthest thing from my mind. But an article that was published last week in The New Times newspaper got me thinking about the future. My future to be exact.

The article insinuated that unless RSSB and the law governing it was reformed, we’d all be up the proverbial creek without a paddle.

Using Twitter, I reached out to the institution on Friday and, lo behold, its press officer contacted on Sunday and arranged a Monday interview with Emmanuel Kayitare, RSSB Director of Pensions and Pre-Retirement Benefits.

Let me give you a summary of what I learnt in my two-hour long discussion with the gentleman.

I learnt that I was just a few clicks away from knowing my social security information. I assumed that it would be a tedious task, but honestly all I had to do was go to www.rssb.rw and click on the ‘online services’. In fact I did it right there and left with my pension statement safety tucked in my pocket.

Secondly, I learnt that employers had a legal obligation to pay their employee’s social security contributions. That’s right. EVERY EMPLOYEE. So, if you employ a housegirl, you MUST contribute to RSSB. Ditto if you have a herdsman, nanny or farmworker.

I had no idea that this was obligatory; I assumed that the pension system was meant for only people working within the formal sector. I was wrong. So, if you employ someone, and don’t put some money aside for RSSB contributions, know that you are engaged in illegality.

Thirdly, unless something was done and done fast, Rwanda’s social security system would go bust in 2044.

That’s right; in 29 years RSSB will have no money to pay pensioners their retirement benefits.

So, if you are 26 and below, forget about retiring at the age of ripe old age of 55 (which is when you can start collecting retirement benefits according to Rwandan law). There simply won’t be any money to give you.

Those who would have already started receiving their benefits will have to make a plan; perhaps get up from their rocking chairs and enter the job market once again. Walking cane, creaky bones and all.

OR…we can agitate for pension reform before things get out of hand.

Currently, RSSB has Rwf 301.6 Billion in its coffers. That sounds like quite a lot until you see the debit section; the institution owes Rwf 75.7 billion to pensioners (which is okay) and Rwf980.3 billion to non-pensioners i.e. people like me who are paying into the system but haven’t retired yet.

Just last year, in 2013-2014 financial year, RSSB paid Rwf12 billion in retirement benefits. There simply isn’t enough money in the system currently.

The elderly are able to live dignified lives due to the pension system. What will happen when this system fails?

The elderly are able to live dignified lives due to the pension system. What will happen when this system fails?

So, what should be done? Either RSSB can avoid asking people to put more money in the system and use the money it has in its coffers to invest in extremely lucrative business ventures (which are also often risky) or Rwandans can increase their monthly social security contributions.

Currently, we pay 6% of gross income. That is the lowest in the region by quite a distance. An external auditor has recommended that contributions increase from 6% to 10% of gross income. Which is a lot less than Kenya’s 27%. Or Uganda’s 15%.

I found it shocking that nothing has been done so far. Someone is sleeping on the job. A revised pension law that increases pension contributions should have been debated, passed and published in the Official Gazette eons ago.

Right now, the Senate is debating a revised pension bill that maintains the current rate of 6%. I think that is scandalous, especially because there is irrefutable data showing that the current status quo is untenable.

I worry that impending pension crisis will be left to my generation to solve. And that is unfair indeed.

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