Government introduces minimum monthly pay in landmark pension overhaul

Public Service Minister, Hon. Muruli Mukasa

KAMPALA, Uganda — The government has overhauled the public service pension system, introducing a minimum monthly payment and a contributory model designed to ensure retirees can afford basic necessities.

The reforms, part of the Public Service Pension Fund Act of 2025, aim to protect low-income civil servants who previously retired with as little as 5,000 Ugandan shillings per month. Under the new guidelines, the lowest-earning pensioners will receive at least one-quarter of their final monthly salary.

Implementation of the Public Service Pension Fund began Feb. 1, with mandatory employee contributions scheduled to start in July 2027.

A shift to contributory funding

The new system transitions public service from a non-contributory model to one where employees contribute 5% of their monthly salary and the government adds 10%. This 15% total contribution is expected to generate 1.3 trillion shillings annually, creating a self-sustaining fund within three years.

Public Service Minister Wilson Muruli Mukasa said the shift is intended to help civil servants retire with dignity. State Minister for Public Service Grace Mary Mugasa noted that the previous system left retirees vulnerable to budget cuts and administrative delays.

To support the transition, the government has proposed 408.4 billion shillings in the upcoming budget to cover initial employer contributions.

Expanded retirement options

The Act increases the number of ways a civil servant can exit the workforce from five to 12. Notable changes include:

Marital Grounds: Men may now retire on marital grounds after five years of service, a provision previously reserved for women.

Early Retirement: Employees can opt for early retirement at age 45.

Missing Persons: Families of employees who are missing or presumed dead are now entitled to receive their benefits.

Mandatory Age: The standard retirement age remains 60.

Administrative and digital reforms

The Ministry of Public Service is phasing out the requirement for life certificates. Instead, beneficiaries will undergo biometric verification at regional service centers every quarter.

Victor Leku Bua, commissioner for compensation, confirmed that the new law prohibits pensioners from using their pension as collateral for bank loans. He also clarified that while the minimum pension provides a monthly safety net, those covered under certain new criteria may forfeit the traditional one-off gratuity lump sum.

Of the 360,000 current public servants, approximately 323,628 are expected to join the new scheme. Those within five years of the mandatory retirement age will have the option to remain under the old system or migrate to the new fund.

Economic impact

The Uganda Retirement Benefits Regulatory Authority (URBRA) expects the fund to reach 26 trillion shillings within 15 years. Benjamin Mukiibi, URBRA’s manager for corporate strategy, said the scale of the fund will provide significant capital for national investment, generating interest for members.

To ensure accountability, the law includes penalties for accounting officers who fail to remit worker contributions on time.