Uganda is preparing to move public servants to a new contributory pension system, with employees set to contribute 5% of their salary while Government contributes 10% as the employer.

The new arrangement is scheduled to take effect on 1 July 2027, marking a major change from the existing non-contributory public service pension system.

The reform is being implemented under the Public Service Pension Fund Act, 2025, which established the Public Service Pension Fund (PSPF). Uganda’s Ministry of Public Service has listed the Act among the official documents guiding the pension reform.

Under the new system, contributions from public servants and Government will be paid into the Public Service Pension Fund.

The employee contribution will be 5%, while Government will contribute another 10%, creating a combined contribution of 15% of the applicable salary.

The funds will be accumulated and invested to help finance members’ retirement benefits. Uganda Retirement Benefits Regulatory Authority says the reform is designed to move the public service from the previous unfunded, non-contributory arrangement to a funded contributory system.

Unlike a purely defined-contribution arrangement, the new public service pension system retains important defined-benefit features. The existing pension formula will continue to be used in determining qualifying retirement benefits, according to information released on the reform.

The new pension arrangements will affect public servants in government institutions and other categories covered by the public service pension framework.

These include employees in traditional government service, local governments and the teaching service, as well as other eligible public institutions.

The reform is intended for public officers who are not already covered by another pension arrangement.

Public servants who are below 55 years are expected to join the new scheme. Those aged 55 and above will have an option to join the new arrangement or remain under the existing pension arrangements, subject to the applicable transitional provisions.

The introduction of contributions does not wipe out pension rights that public servants have accumulated under the existing system.

The transition arrangements provide for recognition of service rendered before the new scheme takes effect. URBRA says accrued benefits from past service will be recognised through transitional arrangements, while Government remains responsible for obligations arising under the previous system.

Existing pensioners will also continue to receive their benefits under the arrangements applicable to them.

The pension reform does not change the statutory retirement age for qualifying public servants.

The retirement age remains 60 years, while the existing pension calculation framework and modes of retirement are also retained under the reform.

The new system is therefore primarily a change in how public service retirement benefits are financed, accumulated and administered rather than an immediate change to the retirement age.

The new scheme also provides for benefits for members who leave public service before qualifying for a regular pension.

Members who have made contributions but do not qualify for a pension may receive contribution-based benefits in accordance with the provisions of the scheme.

This is particularly relevant to public servants who resign or otherwise leave employment before meeting the requirements for a full pension.

The specific benefits available will depend on the circumstances of the member's exit and the applicable provisions of the law.

For members who qualify for a pension, payments will continue for the lifetime of the retiree.

The scheme also provides for benefits to eligible survivors or beneficiaries when a pensioner dies, in accordance with the law.

The intention is to provide public servants with a structured retirement income while creating a fund that accumulates assets to support future pension obligations.

For decades, Uganda's public service pension system operated on a non-contributory basis, with pension and gratuity obligations financed directly by Government.

URBRA has noted that the previous arrangement did not accumulate pension assets, contributing to unfunded liabilities and challenges such as pension payment delays and arrears.

The new system is intended to create a funded pool of pension assets, improve pension financing and strengthen the long-term sustainability of retirement benefits.

The Ministry of Public Service has also been undertaking technical preparations and capacity-building as Government moves towards operationalising the new fund.

Government institutions are being encouraged to prepare their systems ahead of the July 2027 implementation date.

Among the preparations are updating employee records, cleaning personnel data and ensuring that institutional budgets can accommodate the required pension contributions.

Accurate employee information will be important during the transition because records will need to be transferred and matched with members under the new pension system.

The Ministry has also been conducting sensitisation activities to help public servants and responsible officers understand the changes.

For an employee whose applicable monthly salary is Shs2 million, a 5% employee contribution would amount to Shs100,000 per month, while the Government's 10% contribution would amount to Shs200,000.

That would result in Shs300,000 being contributed to the pension fund each month, before considering investment returns and the specific rules governing the calculation of retirement benefits.

The actual pension payable at retirement, however, should not be interpreted simply as the total of these monthly contributions. The Public Service Pension Fund incorporates defined-benefit features and transitional arrangements that determine how qualifying retirement benefits are calculated.

The planned rollout represents a significant shift in the way Uganda finances public service pensions.

From 1 July 2027, eligible public servants will begin making regular pension contributions, while Government will make an employer contribution of 10%.

The reform is expected to create a funded pension system in which contributions are accumulated and invested while preserving defined-benefit elements and protecting qualifying rights earned under the previous arrangement.

With the Public Service Pension Fund Act, 2025 already providing the legal framework, Government agencies are now preparing their systems, records and budgets ahead of the 2027 transition.