Axis Pensions CEO on the state of Rwanda’s pension sector

Rwanda's pension sector has shown remarkable growth in recent times, despite facing various challenges. The CEO of Axis Pensions, Eric Quartey, discussed the state of the pension sector in Rwanda in an interview with CNBC Africa's Julius Bizimungu. Quartey highlighted the significant growth in the sector, which has been largely driven by the state-run pension schemes controlled by RSSB. He noted that investment income and new contributions have played a crucial role in the sector's expansion. Despite the impact of the pandemic on employment, Rwanda's economy is rebounding, and people are returning to work and contributing to their pension funds. Quartey expressed optimism for even more impressive numbers in the future, reflecting the resilience of Rwanda's pension sector. However, the growth in public pensions, which account for the majority of the sector, contrasts with the slower progress in private pensions. Quartey attributed the low growth in private pensions to several factors. Firstly, private pensions are not mandatory in Rwanda, leading to low awareness and adoption among employers. Additionally, tax regulations create disincentives for establishing private pension schemes, as contributions are taxed as allowances. Quartey emphasized the need for policy reforms to address these barriers and create a more conducive environment for private pensions to flourish. Quartey proposed increasing the contribution rate to private pensions to 10%, with a portion of the contributions diverted from RSSB to private pension service providers. This strategy aims to stimulate growth in the private pensions sector and foster a more diverse pension system in Rwanda. He underscored the importance of collaboration between industry players and the government to promote the expansion of private pensions and improve overall pension coverage in the country. Moreover, Quartey lauded the government's initiative to introduce the Agaciro Development Fund, an informal sector pension scheme aimed at extending pension coverage to citizens not included in existing schemes. By integrating data from the Agaciro Fund with private pensions, Rwanda can enhance pension inclusivity and broaden the reach of pension benefits. Quartey emphasized the need for continued efforts to encourage more organizations to embrace private pensions and diversify the pension landscape in Rwanda. Despite the challenges facing private pensions, Quartey remains hopeful for the future of Rwanda's pension sector. The combination of government support, industry innovation, and policy reforms is expected to drive further growth and transformation in the sector. With a strategic approach towards enhancing private pensions and expanding pension coverage, Rwanda is poised to achieve significant milestones in its pension sector development.