Uganda’s Pension Sector Urged to Innovate for Informal Workers

The Uganda Insurance Association (UIA) has called for stronger partnerships, innovative insurance products and greater financial inclusion to extend pension coverage to millions of Ugandans working outside the formal sector.

Speaking at the 2nd Annual Thought Leaders Forum on Pension at Sheraton Hotel Kampala, UIA Chief Executive Officer Jonan Kisakye said Uganda’s retirement system must evolve to reflect the country’s predominantly informal labour market.

Kisakye cited Uganda Bureau of Statistics data showing that 89.2 percent of employed Ugandans work in the informal sector, while about 80 percent have no access to pension, old-age or retirement insurance schemes.

“This tells us that pension inclusion can’t be addressed through formal employment structures alone,” Kisakye said.

He called for flexible pension products that allow workers with irregular incomes to make affordable contributions, monitor their savings easily and gradually build retirement income.

Kisakye said technology will also be critical in reducing transaction and distribution costs and expanding access to retirement products.

The forum, held under the theme “Expanding Pension Coverage through Insurance Innovation, Partnerships and Financial Inclusion,” brought together policymakers, regulators, insurers, pension providers, employers, development partners and other stakeholders to discuss ways of widening retirement security.

Insurance urged to target pensioners

Ministry of Public Service Commissioner Bua Victor Leku, who presided over the forum, urged insurance companies and other retirement service providers to develop products targeting public service pensioners.

Leku said Uganda’s approximately 98,000 public service pensioners represent an untapped market for health insurance, funeral cover, annuities and other long-term financial products.

He said many pensioners, most of whom belong to associations, have expressed interest in health and burial insurance but are often excluded from existing products because of their age.

“We are encouraging you to take advantage of the lump sum that we pay from the public service and be able to address the long-term social security of these vulnerable persons,” Leku said.

Government currently spends about 850 billion shillings annually on retirement lump-sum benefits. Leku warned that many retirees exhaust the money within two to three years because they lack adequate financial preparation.

He said the new contributory public service pension scheme, scheduled to take effect in July 2027, could accumulate assets worth 40 trillion shillings within 15 years.

Under the scheme, about 365,000 public servants will contribute five percent of their gross salaries, while government will contribute 10 percent, generating an estimated one trillion shillings annually.

Leku urged insurance companies to partner with government in investing and managing the fund.

Old Mutual Life Ansurance Uganda managing director Patrick Kimathi said insurance should complement pension schemes by providing a wider range of retirement solutions.

Kimathi said life insurance can combine long-term savings with protection against risks such as death, disability and longevity.

“I treat insurance or life insurance as a continuum of retirement solutions. It is not just a matter of choice between either pensions or insurance.”

He said stronger linkages between pension funds, life insurers, employers, banks, SACCOs, government and technology companies could help reach millions of Ugandans without formal retirement arrangements.

Kimathi said annuities and income-drawdown products can help retirees convert accumulated savings into a steady stream of income rather than spending their retirement benefits within a short period.

“Retirement planning should not begin at retirement,” Kimathi said, urging Ugandans to start preparing for retirement early.

He also proposed greater use of group life assurance within retirement schemes to protect workers and their families against premature death or disability.