Members of Parliament have expressed dissatisfaction over what they described as poor funding selections involving pension funds managed by Rwanda Social Safety Board (RSSB), warning that low returns are eroding the true worth of retirees’ advantages amid rising residing prices.
The difficulty was raised on Monday, Could 18, throughout a session wherein the Parliamentary Committee on Social Affairs tabled earlier than the Decrease Chamber its report on the evaluation of the Auditor Common’s particular audit into the administration of the pension department masking the interval between July 2015 and March 2025.
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Presenting the committee’s findings, Chairperson Veneranda Uwamariya mentioned pension funds had been invested in initiatives that didn’t ship significant returns.
“The pension funds have been invested in initiatives which don’t generate vital returns within the pension insurance coverage sector,” Uwamariya advised lawmakers.
Based on the report, RSSB invested Rwf239.4 billion in 15 initiatives, representing 15.4 per cent of complete pension property. Of this, Rwf114.5 billion was invested in 10 home initiatives, whereas Rwf124.9 billion went into 5 overseas initiatives.
Nevertheless, the committee famous that previously 5 years, practically all initiatives didn’t generate returns, apart from one overseas funding.
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The report additional highlighted structural weaknesses in funding governance, together with weak documentation and restricted threat evaluation.
Out of 48 firms wherein RSSB invested in, 36 had no paperwork outlining the funding framework. Amongst 10 firms that submitted documentation, seven failed to obviously outline funding goals, anticipated returns, or threat tolerance ranges.
The audit additionally confirmed that RSSB’s pension investments, valued at Rwf1,550 billion as of June 30, 2024, have persistently underperformed towards targets.
Whereas the long-term goal was set at a 15 per cent annual return, precise efficiency over the previous decade ranged between 3.7 per cent and 6 per cent, together with the impression of inflation.
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Fairness investments failed
Fairness investments carried out even decrease, producing returns between 0.2 per cent and 4 per cent.
Uwamariya famous that some investments have been undertaken with out ample evaluation.“Some funding initiatives have been carried out with out in-depth evaluation.”
The committee noticed that such weaknesses, mixed with giant allocations to underperforming property, threat undermining the long-term sustainability of the pension fund.
It beneficial strengthening funding governance, enhancing compliance with funding coverage, enhancing threat evaluation, and enhancing reporting techniques to safeguard members’ long-term pursuits.
Deputy Chairperson Christine Mukabunani mentioned the committee additional beneficial that the Ministry of Finance and Financial Planning undergo Parliament, inside three months, a roadmap outlining how excellent pension contribution arrears shall be recovered.
MP Théogène Munyangeyo mentioned pension investments ought to be aligned with authorized enterprise plans and anticipated efficiency targets, warning that some initiatives weren’t delivering as anticipated.
He argued that when evaluating funding efficiency, elements equivalent to inflation and depreciation ought to be taken under consideration, noting that underneath regular circumstances, acceptable limits are round 8 per cent.
“If a challenge was anticipated to generate a 15 per cent return, however foreign money depreciation is working at 13 per cent — nicely above the same old charge of round 8 per cent — the true worth of that return is considerably eroded. In such circumstances, the funding successfully stops being worthwhile,” he mentioned.
Weak oversight
Munyangeyo additionally questioned the Ministry of Finance’s oversight position, asking why stronger motion was not taken earlier regardless of its involvement in approving funding selections by related governance constructions.
He famous that the ministry had indicated within the report that it could intensify efforts going ahead, however challenged the timing of such measures.
“The Ministry of Finance and Financial Planning mentioned it’s going to put in additional effort. What made them not do it earlier than?” he requested.
Munyangeyo careworn that funding processes cross by boards and related authorities establishments, arguing that oversight mechanisms ought to be sturdy sufficient to detect errors at an earlier stage.
He mentioned pension funds belong to Rwandans and have to be fastidiously managed to keep away from losses and defend beneficiaries.
Munyangeyo additionally referred to as for a transparent distinction between commercially pushed investments and people undertaken for public curiosity, noting that the 2 shouldn’t be handled the identical in efficiency analysis.
“There are initiatives the federal government should put money into for the general public good, however these ought to be clearly separated from commercially pushed investments” he mentioned.
He additional highlighted considerations over the adequacy of pension advantages, citing examples of former senior officers receiving comparatively low month-to-month pensions.
“A former minister or secretary basic — somebody who as soon as held one of many highest positions in authorities — can retire on a month-to-month pension of as little as Rwf180,000,” he mentioned.
He argued that pension administration techniques ought to guarantee advantages stay balanced with the price of residing to guard retirees’ dignity and buying energy.
