Government expects UGX1 trillion a year from new public service pension scheme

The government expects to collect about UGX1 trillion a year once a contributory retirement scheme for public servants takes effect on 1 July, a Ministry of Public Service official has said.

The scheme will end Uganda’s reliance on a largely non-contributory public service pension arrangement, under which retirement benefits have been met from the budget rather than from workers’ own savings.

Bua Victor Leku, a commissioner at the Ministry of Public Service, said the projected collections would come from roughly 365,000 public servants. He was speaking at the second annual Thought Leaders’ Forum on Pension, organised by the Uganda Insurers Association at the Sheraton Kampala Hotel.

Under the Public Service Pension Fund Act, 2025, public servants will contribute 5 per cent of their gross monthly pay, with the government contributing a further 10 per cent, Leku said.

He said the contributions would build a pool of long-term capital that could be invested for returns while giving public servants greater security in retirement, and that the Public Service Pension Fund could hold as much as UGX40 trillion in assets within 15 years.

Anthony Nsubuga, chief executive of the Uganda Retirement Benefits Regulatory Authority, said the scheme arrives as Uganda tries to widen pension coverage and raise domestic savings for investment.

He said just under four million people are currently covered, out of a working population he put at 26 million — leaving some 22 million outside any retirement scheme. He said the informal sector could not be left out of the expansion, and called on insurers to develop products for it.

Nsubuga also urged pension providers to offer cheaper and simpler platforms and to work with financial technology firms that already have distribution networks across the country.

Jonan Kisakye, chief executive of the Uganda Insurers Association, said widening coverage would require a multi-sectoral approach, particularly for informal sector workers who remain outside formal schemes.

The forum was held under the theme “Expanding Pension Coverage through Insurance Innovation, Partnerships and Financial Inclusion”.