Uganda’s pension sector hits sh30.7 trillion amid governance challenges

Uganda’s pensions sector has reached a record UGX 30.7 trillion, up from UGX 25.4 trillion in 2023/24, with 4.06 million Ugandans now saving for retirement, the Minister of State for Planning, Amos Lugoloobi, announced on Wednesday. The data was released during the sector’s 2024/25 performance report at Fairway Hotel, Kampala.

The growth reflects a resilient economy, with GDP expanding 6.3%, a working-age population of 26 million, and a rising life expectancy of 68.2 years. Yet, only 16% of the workforce is covered by formal retirement schemes, leaving roughly 22 million informal workers — including farmers, traders, and domestic staff — without access.

Average retirement account balances stand at UGX 8.2 million, with higher amounts in mandatory employer-based schemes. In 2024/25, UGX 1.62 trillion was paid out in pensions, lump-sum payments, disability benefits, and other benefits, a 16% increase from the previous year. URBRA officials warned that reliance on lump-sum payouts could threaten the scheme's sustainability as more members retire.

Operational costs rose slightly from UGX 258 billion to UGX 263 billion, with staff expenses representing 51.5% of the total. Governance and compliance lapses — including unlicensed trustees, delayed benefit payments, inaccurate member data, and inadequate disclosure — were cited as key challenges affecting efficiency.

Despite these issues, performance varied widely across schemes. The sector’s average interest rate was 14.6%, with a high of 20.4% and a low of 3%, highlighting that governance and management efficiency, rather than scheme size, are critical to returns.

URBRA called for improved transparency, stronger trustee capacity, lower operating costs, and more prudent investment strategies. Minister Lugoloobi noted that the retirement benefits sector now accounts for 13.6% of GDP and plays a central role in Uganda’s savings strategy, which aims to lift domestic savings to 40% of GDP from the current 21%.

The report underscores the dual challenge for Uganda: expanding coverage to informal workers while improving governance and efficiency in the existing pensions framework.