Aging population poses crisis for Uganda as 16 million workers lack pension cover

KAMPALA, Uganda — Uganda is hurtling toward a systemic social and economic crisis as a rapidly aging population outpaces a retirement savings framework that currently excludes 16 million workers.

While the national pension sector appears robust on paper—with assets surging 21 percent to Shs30.7 trillion in the year ending June 2025—the growth masks a dangerous coverage gap. According to the 2024/25 Retirement Benefits Sector Annual Report, only four million Ugandans are enrolled in formal schemes, leaving the vast majority of the 20 million-strong labor force without a financial safety net.

The demographic shift is stark. Uganda’s elderly population is projected to more than double from 2.3 million today to over 5.4 million by 2050. This surge threatens to place an unsustainable burden on government resources and a younger generation already grappling with a high dependency ratio.

The Uganda Retirement Benefits Regulatory Authority report highlights a sector defined by concentrated wealth. Despite delivering an impressive 14.6 percent return on investment, these gains benefit only a fraction of the population. Approximately 84 percent of workers—including farmers, traders, and boda boda riders—remain trapped in the informal sector, entirely bypassed by formal pension arrangements.

In a move to curb fiscal volatility, the government recently enacted the Public Service Pension Fund Act, 2025. The legislation transitions civil servants from a taxpayer-funded, non-contributory model to a pre-funded contributory system. While this stabilizes the public sector, it does little to address the millions in the private and informal spheres.

Investment strategies within the sector also remain defensively positioned. Currently, 80.25 percent of pension assets are tied up in government securities. While this provides stability, analysts argue that greater diversification into infrastructure and private equity is required to stimulate the long-term economic growth needed to support a graying nation.

As the government pursues its Tenfold Growth Strategy to nearly double domestic savings to 40 percent of GDP by 2040, the pension sector is expected to be the primary engine. However, without aggressive reforms to digitize enrollment and create products for the informal majority, the strategy risks leaving millions to face old age in poverty.