The new system will require government employees to contribute five percent of their monthly salary, while the government will contribute an additional 10%. Previously, government employees were covered by an unfunded non-contributory pension scheme in accordance with the Pensions Act (Chapter 89). The Government paid lump-sum benefits and monthly pensions directly from the State budget.
Parliament passed the Law on the Civil Service Pension Fund (PSPF) of 2025, marking the end of an era and the beginning of a modern funded pension system. This transformed an unfunded non-contributory system into a funded funded scheme. The Law establishes the Civil Service Pension Fund (PSPF) and defines a mandatory pension scheme for the relevant categories of civil servants. The previous system guaranteed income to pensioners, but the government noted that it did not accumulate assets, creating huge unfunded liabilities, which led to delays in payments and debts.
General Katumba Wamala, the Minister of Public Service, said the new fund would be operational next year with a one-year transition period designed to prepare institutions for implementation before the start of collection on July 1, 2027. «This is one of the main reforms in the civil service sector, and it is aimed at the benefit of civil servants. It will be launched next year», Katumba Wamala said.
According to the Uganda Retirement Benefits Authority, there were 334,146 government employees and 64,855 retirees in the country. Information from the Parliament's website indicates that in fiscal year 2021/2022, total annual pension payments amounted to 2.8 Ush trillion, while actual annual pension payments reached 3.1 Ush trillion.
General Katumba said that the board in charge of the fund is already working to create the necessary management systems. He added that one of the key advantages of the reform is a more efficient processing of pension benefits, which will make it possible to pay a pension immediately after an employee retires.
The funded scheme, created under the Civil Service Pension Fund Act, is expected to transform retirement financing by creating a specialized fund similar to the National Social Security Fund (NSSF) that serves private sector workers. The Minister explained that the scheme will cover government employees appointed on a permanent basis, including employees of ministries, local authorities, education, health, the Ugandan Police and the Ugandan Prison Service.
For decades, government employees have retired without making pension contributions during their years of service. Instead, the government funded payments directly from the Consolidated Fund, a system that created growing long-term liabilities as the public sector expanded. The new pension scheme is part of broader reforms aimed at modernizing personnel management and reducing the Government's long-term pension obligations while ensuring a sustainable and professionally managed retirement savings system.
Catherine Bitarakwate Musingviire, Permanent Secretary of the Ministry of Public Service, urged civil servants not to worry about the new system, explaining that their contributions would be transferred directly from the Ministry of Finance to the Civil Service Pension Fund. Bitarakvate added that, like other funded pension schemes, the fund will invest the savings of participants, allowing civil servants to earn income from accumulated contributions over time.
In its statement, the Ministry of Civil Service assured civil servants that the transition to the new pension scheme will be carried out gradually, with recommendations provided to both current employees and those approaching retirement age. The Ministry clarified that civil servants who retired under the existing system will continue to receive their benefits and monthly pensions from the Consolidated Fund, and the reforms will not affect them. For employees who are already in the service and will switch to a funded scheme, the government has stated that pension rights earned under the old system will be protected through state pension bonds that will be repaid upon retirement.
As part of the transition, Permanent Secretary Catherine Bitarakwate Musingviire instructed all responsible persons to update employee data in the Human Capital Management System, including national identification numbers, dates of birth and dates of first appointment. This information will be used to determine accumulated pension obligations, register participants, and ensure a smooth transition to the Civil Service Pension Fund. The Ministry also instructed the accountants to provide for both a 10% contribution from the employer (government) and a 5% contribution from the employee in the budget for the 2027/2028 fiscal year.
The Ministry of Civil Service ordered government agencies, councils and commissions to bring their personnel policies in line with national standards, stating that no new personnel policy should be implemented without coordination with the Civil Service Commission, the Ministry of Civil Service, the Ministry of Justice and Constitutional Affairs and final approval by the Cabinet of Ministers. «No new policy should be implemented until it is reviewed by the Civil Service Commission, technical approval by the Ministry of Civil Service, legal approval by the Ministry of Justice and Constitutional Affairs, and final approval by the Cabinet of Ministers», the ministry said in a statement. The statement also notes that the existing human resources guidelines must be submitted to the Ministry of Civil Service for review and harmonization within 30 days from July 1, 2026.
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