Exploring the cost efficiency of running voluntary retirement benefits schemes in Uganda: a case of licensed umbrella retirement benefits schemes

Abstract

This study set out to explore the Cost Efficiency of Running Voluntary Retirement Benefits Schemes in Uganda. The specific objectives of the study were to establish the ratio of operational costs to the total member balances in the umbrella retirement benefits scheme, to establish which proportion of the investment income earned in a financial year goes to meeting the costs of running the umbrella retirement benefits scheme, to establish the level of transparency in communicating the operational costs of running the umbrella retirement benefits scheme to the members, and to suggest mechanisms that umbrella retirement benefits schemes can adopt to ensure cost efficiency. The study adopted exploratory and explanatory designs that triangulated quantitative and qualitative methods to study as sample of five retirement benefit schemes. Data were collected using semi-structured self-administered questionnaire and documents review. Quantitative data were analyzed using descriptive statistics, particularly frequency counts, mean, percentages and ratio analysis in the Statistical Package for Social Sciences (SPSS 29.0) to attain the quantitative research objectives. Qualitative data were analyzed by content and thematically to attain the qualitative objectives of the study. This analysis was done with the aid of Nvivo 14.0. The study established that voluntary retirement schemes are generally cost efficient in their operations. However, there are tendencies of inefficiency in administration of these schemes. This is attributed to limited communication frequency and discussion of costs with members and inappropriate communication platforms by the administrators of these schemes. The study recommended that the management of the Schemes should improve on the rate of communication to monthly or utmost quarterly to frequently engage members in the discussion of strategies to minimize administration costs, and it should frequently publish information on the websites due to their convenience and provide feedback platform through which members can provide suggestions regarding the improved administration and management of the schemes. The Management of the voluntary retirement schemes should also use diversified communication platforms to enhance access and flexibility to information and discussions, thereby improving administration and operational cost efficiency. Future studies could consider the effect of digital communication platforms on the performance of voluntary umbrella retirement schemes.