The Need for Further Reforms in Uganda’s Public Sector Pension System

The need to implement further reforms in Uganda’s Public Sector Pension (PSP)scheme, a consolidation of the different schemes is paramount. This arises from the increasing numbers of public servants being employed especially in the ever expanding districts and parliament. This would address the current and future challenge of old age social security risk. The policy brief provides an assessment of the structure, design and the trends in public spending on public pensions; and draws implications for its sustainability and affordability. The study uses public expenditure data on pension payments from the Ministry of Finance, Planning and Economic Development (MFPED), document reviews and some key stakeholder analysis. Results show that the cumulative fiscal burden of public spending on public pensions has been increasing over the years and has reached a higher level to be afforded by government without necessarily crowding out other competing public investments such as infrastructure development. We suggest that the current PSP scheme requires further reforms to gradually convert it from non-contributory to contributory between government and workers, in order to ensure sustainability. This is a good practice recommended by the World Bank for most of the Overseas Economic Cooperation and Development (OECD) countries including those in Africa. Experience from East Africa in Kenya and Tanzania that have implemented second generation pension reforms; show that converting the PSP scheme from non-contributory to contributory scheme eases fiscal burden on national budget and improves efficiency in the management and administration of the scheme.