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The highest interest was 20.4% declared by I&M Bank Staff Scheme, while the lowest was 3% declared by United Bank for Africa staff provident fund.
Kampala, Uganda | THE INDEPENDENT | Uganda’s pensions sector assets have reached an unprecedented UGX 30.7 trillion, up from UGX 25.4 trillion in 2023/24 while the number of Ugandans saving for retirement now stands at 4,062,144, up from 3.37 million.
This was announced by Amos Lugoloobi, Minister of State for planning, as he released the sector’s annual performance report for 2024/25 on Wednesday, 4th March, at Fairway Hotel.
This growth comes against the backdrop of a strong and resilient national economy, with a GDP growth rate of 6.3%; a national working-age population of approximately 26 million, of which only 17.2 million are employed; improved life expectancy at 68.2 years; an estimated elderly population of 2.3 million; and a retirement life expectancy of 17 years.
Thus, while the sector continues on a growth trajectory, it also faces the stark reality that not all Ugandans are covered under existing retirement benefits arrangements. According to the report, only 16% of the working-age population are covered; moreover, these are largely formal employment workers. The remaining 84% (approximately 22 million) include informal workers such as farmers, small shopkeepers, daily wage earners, street vendors, fishermen, domestic workers and the like – who are all excluded from formal pension arrangements.
Even those who are covered by the sector arrangements each have an average of Ugx8.2 million balance in their retirement benefits accounts. “Members with bigger balances are those who are about to exit, and that’s because they have served longer,” said Benjamin Mukiibi, URBRA’s head of strategy, as he presented highlights of the annual sector performance report. Average balances are higher in mandatory employer-based schemes and voluntary schemes. The average member balance in NSSF is Ugx7.6 million.
According to the Uganda Retirement Benefits Regulator Authority (URBRA), these trends have implications for the sustainability of retirement benefits schemes, especially as more members with big balances begin to retire and exit.
In the financial year 2024/25, up to Ugx1.62 trillion was paid out to members in the form of pensions, survivors’ benefits, disability benefits, exempted employment, immigration grants, midterm access, withdrawals and lump-sum payouts. This was a 16% increase from UGx1.40Trillion in FY2023/24. “It is therefore important to restructure the sector schemes in such a way that lumpsum payouts are replaced by pensions and possibly put in some tax incentives to make sure that members stay with the schemes even when they retire.”
One of the key factors affecting scheme performance was identified as operational costs, which increased from UGx258billion in 2023/24 to Ugx263 Billion in 2024/25.
“Costs are central to everything we do. We are monitoring the interest declared by each scheme compared to their expenses,” Mukiibi said, adding that there are some schemes that are administered internally, and these have big expenses on staff. The biggest operational costs were on scheme staff at 51.5%, and those categorized as ‘others’ accounted for 38%. The failure to fully unpack items classified as “others” was identified as a key governance issue, which breaches financial disclosure regulations.
The report further highlighted key governance and compliance failures, which, according to Mukiibi, directly undermine the sector’s pursuit of scale and efficiency. Particularly, governance failures include failure to undertake performance of the Board of Trustees and service providers; unlicenced trustees and lack of fully constituted boards; inaccurate member data and delayed payment of benefits; and failure to supervise outsourced services. Among compliance failures were inadequate disclosures; late and non-remittance of contributions; delayed submission of statutory returns; non-compliance with service level agreements and investment policies.
It must be noted, however, that despite those operational challenges, some schemes performed exceedingly well, and the average interest declared across the sector was 14.6%. The highest interest was 20.4% declared by I&M Bank Staff Scheme, while the lowest was 3% declared by United Bank for Africa Staff Provident Fund.
“This spectrum reveals significant variance in management efficiency. What is it about the schemes that performed well and those that performed poorly?” Mukiibi said as he observed that the important factor is governance and not size of the scheme.
“It is therefore important to undertake some key strategic imperatives to ensure scale, efficiency and management of investment.”
Mukiibi recommended that the sector promote transparency – requiring regular publication of detailed sector information; elevate scheme governance by building trustee capacity and expanding the scope of trustee liability; and optimise financial operations: reduce operating expenses and apply risk decision analysis in alternative investment to implement more prudent, higher-yielding strategies.
While the main interest of URBRA is to protect individual members’ retirement benefits and ensure the best outcome for the member, officials said it is inevitable to look at the sector from a macro perspective. How does the sector fit in with the grand scheme of the national economy?
Minister Amos Lugoloobi observed that at a macro level, the Retirement Benefits Sector now accounts for 13.6% of Uganda’s Gross Domestic Product (GDP) and aligns well with the tenfold growth strategy, which aims to raise domestic savings to 40% of GDP. Currently, domestic savings stand at 21% of GDP, and retirement benefits account for 67% of that.
“We require better governance, operational efficiency and deepening of capital markets. URBRA is expected to enhance regulatory oversight to ensure that members’ benefits are protected,” Lugoloobi concluded.
