Parliament has enacted the Public Service Pension Fund Bill, 2024, which mandates that public employees contribute five percent of their salaries to the pension plan.
The Bill, which was presented for its Second Reading by the Minister of Public Service, Hon. Muruli Mukasa, on Tuesday, 25 February 2025, introduces a contributory pension system aimed at establishing a sustainable source of funding for retirees.
According to a report on the Bill, tabled by the Chairperson of the Committee on Public Service and Local Government, Hon. Ojara Mapenduzi, Uganda currently operates an unfunded, non-contributory, defined benefit pension system under the Pensions Act, which has been in place since 1946. This legislation governs and regulates pension and gratuity entitlements for public service employees.
“The existing arrangement provides retirees with a lump sum upon retirement and a monthly pension calculated as a portion of their last pensionable salary. However, actuarial assessments have highlighted the urgent need for reforms,” he explained.
The committee also observed that globally, many pension systems are transitioning towards contributory models. The Bill proposes that public employees will contribute five percent of their salaries, with the government supplementing this with an additional ten percent.
Furthermore, the Bill ensures that public employees who are dismissed from service will still receive pension benefits for the period they served before their termination.
The Ministry of Public Service, alongside other stakeholders, has recommended a five percent salary increase across all sectors to counterbalance the deductions.
“The government should prioritize salary adjustments to prevent the deductions from significantly reducing employees’ net earnings. Additionally, salary revisions are essential to address low wages among public servants and the substantial disparities in pay across different roles,” the committee report suggested.
The report further emphasized that the new pension system is expected to enhance national savings and provide a steady source of long-term financing, particularly for private sector investments, thereby stimulating economic development.
Clause 8 of the Bill stipulates the formation of a Board of Trustees, to be appointed by the minister with approval from the Cabinet.
“The Board will comprise representatives from the Ministries of Finance, Labour, Public Service, and Local Government, as well as public service labor unions and three technical professionals from relevant disciplines,” the Bill outlines.
Hon. Jonathan Odur, the Erute South Representative, asserted that the Bill would allow the government to recover outstanding debts from pensioners who have defaulted on their obligations.
“For a government to function effectively, its citizens must fulfill their responsibilities. Any financial liabilities, such as unpaid taxes, must be cleared,” he remarked.
However, Hon. Godfrey Onzima, the MP for Aringa North, opposed the proposal permitting the government to deduct pensions from employees who have failed to settle their tax dues.
“The Bill is focused on contributions. Once you contribute, the funds no longer belong to the individual but rather to the scheme. Therefore, the government cannot seize them simply because a person owes taxes,” he argued.
Hon. Sarah Opendi, the Woman Representative for Tororo District, cautioned against limiting the fund solely to public employees, stressing the need to promote a culture of saving. She proposed that a broader segment of the population be given the opportunity to contribute to the fund.
“When we were reviewing the NSSF Bill, we broadened its scope. Instead of restricting this scheme now and revisiting it for amendments later, we should allow more people to participate,” she suggested.
Attorney General Hon. Kiryowa Kiwanuka clarified that the essence of this scheme is to ensure that every public servant is actively saving.
Speaker Anita Among stated that individuals holding elective positions, members of the armed forces, and employees of security agencies, who are already contributing to their respective schemes, do not need to be included in this program.
According to the 2022 actuarial assessment, Uganda had 334,146 civil servants and 64,855 pensioners.
In the 2021/2022 financial year, total annual pensionable earnings amounted to Shs2.8 trillion, while total pension payouts reached Shs3.1 trillion.
