KAMPALA, Uganda — A deepening divide in Uganda’s labor market is creating a demographic time bomb, as record growth in retirement assets fails to reach the vast majority of the country’s workforce.
While the retirement benefits sector expanded by 21 percent to reach Shs30.7 trillion in the year ending June 2025, the 2024/25 Retirement Benefits Sector Annual Report warns of a looming crisis. Formal pension coverage has stalled at just four million people, leaving approximately 16 million workers—predominantly in the informal sector—without any financial safety net for their later years.
The urgency of the situation is underscored by shifting demographics. Uganda’s elderly population, currently numbering 2.3 million, is projected to surge to 5.4 million by 2050. Without a rapid expansion of pension enrollment, this growing demographic will place unprecedented pressure on government resources and increase the dependency burden on a young population already struggling with economic volatility.
Data from the Uganda Retirement Benefits Regulatory Authority reveals that while the sector delivered an impressive 14.6 percent return on investment, the current structure remains catered to the formal minority. About 84 percent of the 20 million-strong workforce, including farmers, traders, and boda boda riders, remain outside the system.
In an effort to stabilize the public sector, the government recently enacted the Public Service Pension Fund Act, 2025. The law shifts civil servants from a non-contributory model to a pre-funded contributory scheme to ensure sustainability. However, the broader challenge remains the informal economy.
As retirement savings now represent 13.6 percent of gross domestic product, policymakers are under pressure to move beyond traditional models. The national Tenfold Growth Strategy aims to nearly double domestic savings to 40 percent of GDP by 2040, a goal that experts say is unattainable unless the country can successfully digitize and diversify pension products to capture the millions currently left behind.
