Overview:
Uganda rolls out new contributory pension plan for civil servants, ensuring timely retirement benefits and financial sustainability - here's what you need to know
The Ugandan government has introduced a new pension scheme, marking a significant shift in the management of retirement benefits for civil servants.
The Public Service Pension Fund Bill 2024, tabled before Parliament, outlines a contributory pension plan where both employees and employers will contribute to the pension fund.
According to the Bill, each civil servant will be required to contribute 5% of their monthly gross salary to the pension fund, while the government will contribute 10%.
This is similar to the scheme run by the National Social Security Fund. The contributions will be deducted by accounting officers in ministries, departments, and agencies, as well as local governments.
The new contributory pension scheme aims to ensure affordability, sustainability, and good governance. The scheme will provide for the timely payment of retirement benefits and will not depend on budget allocations from the government. This means that pensioners will not be affected by budget cuts.
Accounting officers who fail to remit civil servants’ contributions to the pension fund will face a penalty equivalent to 1.5% of the amount contributable by each civil servant.
The penalty will be imposed until the amount is remitted.
The Bill proposes a qualifying period for pension of at least 10 years of continuous service in a pensionable service.
However, employees who have not served for 10 years may qualify for pension in certain circumstances, such as retrenchment, abolition of office, or retirement on medical grounds.
Aaron Mugaiga, the secretary general of the Uganda Professional Science Teacher’s Union, has welcomed the proposed scheme, but cautioned that it should be implemented well.
He suggested that the scheme should focus on new public servants and those earning above a certain threshold.
The government plans to roll out the new pension scheme in the 2025/2026 financial year.
In preparation, the government will focus on pre-reform activities, such as developing and managing a database, as well as sensitization.
The new scheme is expected to be fully operational by the 2026/2027 financial year.The new pension scheme is expected to benefit over 340,000 employees on the government payroll, as well as 50,000 pensioners.
The government expects the civil servants’ pension fund to grow to about Shs 5 trillion in the first five years in contributions alone.
The rollout of the contributory pension plan is part of the government’s efforts to reform the pension sector and deepen the financial sector.
The government hopes that the new scheme will provide a more sustainable and secure retirement package for civil servants.