This archive report was first published on 10 October 2019.
Uganda's pension industry is facing significant revenue risks and skewed opportunities due to low asset management fees and payouts, according to the latest data compiled by the Uganda Retirement Benefits Regulatory Authority (URBRA).
As of June 2019, Sanlam Investments Uganda Ltd held the largest share of pension scheme assets under management, amounting to Ush822.4 billion ($222 million), followed by GenAfrica Asset Managers with Ush428.4 billion ($115.7 million) during the same period.
Stanlib Uganda registered total assets worth Ush376.6 billion ($101.7 million), while Britam Asset Managers posted overall assets valued at Ush81.5 billion ($22 million) as of June 2019.
UAP-Old Mutual Financial Services recorded total assets valued at Ush57.3 billion ($15.5 million), and ICEA Asset Management registered total assets worth Ush43.3 billion ($11.7 million) at the end of June 2019.
According to URBRA figures, the total assets held by the retirement benefits industry rose from Ush12.5 trillion ($3.4 billion) to Ush13 trillion ($3.5 billion) between April and June 2019.
More than 50 per cent of Ugandan pension scheme assets under management are held by schemes with assets exceeding Ush80 billion ($21.6 million), raising questions about the amount of fees collected by fund managers versus running costs, industry penetration rates, and future monthly benefits paid to retired employees.
While individual pension scheme assets have steadily increased over the years, asset management fees charged by fund managers have consistently dropped amid fierce competition for large clients, significant price discounts, and lack of regulatory guidance on pricing models.
As a result, average asset management fees based on the value of pension scheme assets have fallen from two per cent in 2010 to less than 0.5 per cent to date, despite considerable administrative costs incurred by local fund managers, industry sources indicated.
Stanbic Bank Uganda and Standard Chartered Bank Uganda held the largest share of cash and demand deposits belonging to retirement benefits schemes by the end of June 2019, with Stanbic Bank Uganda holding 27.3 per cent of cash and demand deposits placed by private pension schemes and 20.3 per cent of similar deposits belonging to NSSF Uganda.
Standard Chartered Bank accounted for 27.8 per cent of cash and demand deposits placed by private pension schemes and 24.5 per cent of similar deposits belonging to NSSF Uganda.
“Falling asset management fees and government’s reluctance to liberalise the pension industry are cited for the recent exit of South Africa-owned fund managers from the local market,” noted Kenneth Kitariko, former CEO at African Alliance Uganda.
