Report On The Member's Seminar 23rd November 2018

Executive Summary

In a bid to realize its vision, the Board of Trustees and Management of the Parliamentary Pension Scheme developed a programme to prepare members of the Scheme for a happy and fulfilled life in retirement. The objective of the session was to enhance member’s knowledge on how to effectively plan to sustain quality life during retirement. The 5th seminar was organised for Members of Parliament and was held at the Conference Hall, Parliament building on 23rd November 2018. The topics covered included investing for retirement and the Parliamentary Pension Scheme Loans product. An experiential presenter, a former Member of Parliament also shared his experience of life in retirement highlighting on the realities at hand during this critical journey of life. 
The Chief Operations Manager, Parliamentary Pension Scheme, provided the welcome remarks. 
The investment management expert stressed the need for each member to come up with a retirement plan, set retirement goals and targets and monitor progress of set goals. 
Information on the loans product was relayed to enlighten members on the requirements for accessibility, the challenges faced, and recommendations to enhance the portfolio.
Among the recommendations was the importance of avoiding the biggest mistake while making investment decisions of saying “I will start tomorrow”. It was also crucial to work towards realizing sufficient savings and investment income to cover living expenses for work to become optional during this stage of life.

1.0    Introduction

The Parliamentary Pension Scheme organised a one day member’s seminar on 23rd November 2018, at the Conference Hall, Parliament Building. The purpose of the session was to enhance members’ knowledge on retirement planning. The seminar was also used as an avenue to share real life experiences and realities of life during retirement. 

1.1    Objective

The objective of the session was to enhance member’s knowledge to effectively plan for retirement.

1.2    Methodology

The seminar took the form of formal presentations and interactive discussions. The topics presented were as follows:

•    Investing for retirement
•    Experiential Presenter
•    The Parliamentary Pension Scheme Loans Product

1.3    Deliverables/outcomes

It was anticipated that the seminar would result in:

•    Sensitization of  members  on retirement planning;
•    Appreciation of real life challenges and opportunities during retirement;
•    Improved understanding of the Parliamentary Pension Scheme Loans Product.

2.0    Proceedings of the activity

2.1    Welcome Remarks by the Chief Operations Manager

The Chief Operations Manager, Ms. Nightingale Mirembe Ssenoga welcomed members and facilitators to the seminar and thanked them for honouring the invitation. 

She informed members that the session was the second of its kind during the year 2018 and noted that she was happy to be associated with this noble cause of working towards a successful journey to retirement.

She informed members that after the training she anticipated that members would adapt a better savings and investment culture for sustained life after serving Parliament. She advised members the importance of embracing a holistic picture of what they envisaged to do, to ensure moral, economic, and spiritual comfort. She emphasized that economic well-being was vital to sustain medical bills, food, savings and investments and thereby enjoying a   stress free life. She warned that decisions taken now would determine how healthy their bodies would be in the future.

She pointed out that poor attendance of members when invited to such sessions was one of the challenges the Scheme was facing and castigated them for not recognizing the importance of acquiring such knowledge. She requested members to relay the important message to their colleagues who were not in position to attend. She reminded members that most of their files had incomplete nomination forms and implored them to update their information to avoid challenges encountered with payment of benefits upon demise of members. She assured members of utmost confidentiality of information availed to the Scheme and echoed to them to think about the unknown in case they passed on. She informed members that when they do not exercise their rights on determining how their benefits should be distributed, the Board would on their behalf.

2.2    Highlights of Presentations

Presentation 1, Investing for Retirement

Mr. Ayeko Ongodia, The Chief Executive Officer of Xeno Investment and Management emphasized the importance retirement plans and knowledge on investment management for successful execution of investment decisions.

He implored members to generate income today not only to finance daily expenses but also expenses after employment life. He appealed to members to reflect on various income generating options they could explore when their term of office was over. He emphasized that it takes a combinations of things to facilitate life in retirement and called upon members to reflect on the following retirement concerns;

i)    What will be their retirement cost?
ii)    How much to have in the retirement pot?
iii)    How much to invest from retirement savings?
iv)    What risks should be taken?
v)    What risks should be avoided?

He encouraged members to work towards a fruitful retirement by anticipating what retirement would cost and working out to reach the set target through savings and investment. He indicated that the biggest problem most people were facing was lack of knowledge about the investment options on the market.

He advised members to;

• Have enough savings, investment income and/or pension income to cover living expenses.
• Venture into private and informal investments. These would however require significant supervision to reduce risk on returns.  Such investments could be;
• Small business lending
• Small business ownership 
• Rental units/Apartments
• Agriculture
• Venture into public and formal investment ventures. These would require modest returns due to moderate risk and little supervisory efforts. Such investments could be;
• Fixed deposits
• Treasury bills
• Treasury bonds
• Shares of listed companies
• Plan appropriately by identifying investment goals and monitor performance and progress.
• Join investment groups, investment clubs and SACCO’s .
• Set up an investment account.
• Save and invest a given fraction of ALL INCOME.
• Fight temptation to borrow for consumption.
• Spend responsibly. 
• Work out what each investment is yielding per year.
• Avoid the “I will do it tomorrow” syndrome.
• Avoid buying stocks from one company, diversity in areas such as energy and telecom to take care of economic fluctuations.
• Insure all investments against emergent risks.
• Seek services of professional investment managers licenced by the Capital Markets Authority.

Presentation 2, Experiential Presenter

Hon. Arumadri retired in 2011. He thanked the Board and Management of the Scheme for inviting him to share his real life experience during retirement. He warned members to be mindful that they were on a journey which they must prepare for and encouraged them to make informed decisions now to avoid regrets in future. He requested them to reflect on the following inspirational quotes;
“As you make your bed you will lie in it”
“The witch doctor leaves sickness at home and goes to treat people outside” 
“Better late than never”
“Ecclesiastes Chapter 3 verse 1-8, there is a time for everything and a season for every activity under heaven”
“Everything that goes up must come down”
“If you give an input you get an output” 
“As you begin you must end up in ashes, from the cradle to the grave”. 

He informed members that in preparing for his retirement, he purchased a policy of life insurance and saved enormously. He avoided spending money unnecessarily having been warned that no amount of money could satisfy a voter. With the savings made during his term in Parliament and previous employment he built a school within his home community and a storeyed house in a prime area of Kampala. He earns a good rental income from the house. He informed members that living simple and maintaining humbleness has helped him continue looking much better in retirement.  

Members were advised to;

• Avoid alcohol and smoking.
• Eat well, sleep sound, avoid stress and have peace of mind.
• Avoid extra marital affairs. 
• Avoid selling property and incurring huge debt to finance politics.
• Be cautious of where they come from.
• Be at peace with oneself.
• Be close to God.
• Build and maintain good relationships with family.
• Invest in children by bringing them up responsibly.
• Maintain affordable lifestyle.
• Give children the best education by providing scholastic materials. 
• Maintain links with the village, be among villagers and associate with them.
• Support their wives on responsible decisions which positively impact on their families.

Presentation 3, The Parliamentary Pension Scheme Loans Product

The presentation was delivered by Mr. Solomon Wilson Kirunda, a member of the Board of Trustees.

He informed members that in a bid to increase on the investment classes and the desire for members to access loan from their savings, the loans product was introduced. He gave an overview of the loans product, eligibility and application and approval.

He indicated that the loan was based on one’s Scheme credit and balance on the payslip. He further informed members that the loans registered good returns and was among the high performing asset classes. A memorandum of understanding was executed with the Parliamentary Commission to ensure deductions are made at the source. The product was however facing a number of challenges such as restriction by investment regulations of URBRA (5% of Total assets), dissatisfaction of members due to vetting process and delayed disbursements. He recommended that members support amendment of the PPS Act and regulations as well as prompt signing of offer letters and loans agreements. He thanked members for their active participation and wished them a successful journey into retirement.

3.0. Issues that emerged from the discussions

a)    Members were originally reluctant to have their funds loaned to members in line with the pension legislation globally. There was need to balance non-politicians interests mortgage risks. Members were assured that potential risks related to lending had been mitigated through insurance and internal controls. Some of the objectives of the loans facility were to keep honourable members out of banks as well as make money from the interest earned on loans and accord them a dignified retirement. The loans are affordable and accessible to members at an interest rate of 15% which no bank could offer. 

b)    Members requested to be updated on the status of the liberalization bill and other related amendments being fronted from which they anticipated that once approved, new products such as mortgage would be expected. They were however disappointed that the liberalization bill was not supported by NSSF and was still at executive level. Members were assured of support to influence their interest that once it reaches the committee level.

c)    Members inquired on the possibility of being paid lump sum after parliament service so that they receive a considerable amount of funds. It was clarified that the regulations grant payment of lump sum to members who are below 45 years and served less than 10 years. Those above 45 years are paid one third of their Scheme credit and the rest of funds would be paid as monthly annuity.

d)    Members requested for clarification on why they are given less funds when they apply for loans. They were informed that the amount was dependent on ones scheme’s credit and health of the payslip.

e)    A justification was sought on the 15% interest rate charged for loans. It was explained that the Board had to ensure prudent investments and therefore takes into consideration of the return on the risk free investments. Members were also reminded that the mandate of the Scheme was to ensure members get reasonable pension. The guaranteed interest of 8% to member’s dictates that loans cannot be granted at a lower interest rate. In the above regard the services of an actuary were periodically engaged to ensure sound health of the Scheme.

f)    The amount of transport refund given to members was meagre. An appeal was made to the Board to consider increasing the amount to keep members energized and motivated as was the practice with the Parliamentary SACCO. It was clarified that the mandate of the SACCO was different from that of the Scheme. The mandate of the Scheme was to look after members when they retired but the SACCO had no such obligation and therefore gave members funds when required. The interest regimes of the SACCO and the Scheme were also entirely different. 

g)    Members appreciated that such sessions were being organised in the premises of Parliament to reduce on the cost implications. 

h)    Participants were cautioned to change their mind-set and think about their well-being by creating time to come and get knowledge from such sessions which was very expensive to fund especially after ones exit. It was hoped that with the enlightenment from the session members would use the knowledge to enhance their planning for retirement.

i)    Members were informed that the Annual General meeting would be held in February 2018. All were encouraged to attend to receive the Board’s reports on the Scheme operations.

j)    Members appreciated the session and called upon management to frequently organise such seminars for members given that the plight of members who left parliament was very appalling.  Passing on such knowledge timely was very critical for members.

4.0    Closing Remarks

The Chief Operations Manager thanked members for attending and participating in the session. She hoped to receive them at the Parliamentary Pension Scheme offices in case they wanted further consultations regarding Scheme business. She encouraged them to start planning now by comparing various risk free investment options. She further advised them to diversify investments and institute good governance principles. She resounded the saying that “what goes up comes down” as a lesson all should learn from.  She concluded by appealing to members to develop and implement retirement goals early to avoid destruction. The session was adjourned at 2.30 pm.

5.0    Conclusion

The seminar was successfully attended and members appreciated the information passed on them. They acknowledged that such sessions were long overdue and needed to be organised frequently.
Members pledged to pass over such pertinent information to their colleagues who had failed to attend and encourage them to attend the subsequent sessions.