Auditor General Warns of Skyrocketing Pension Burden

The Auditor General, Edward Akol, has issued a dire warning regarding the sustainability of Uganda’s pension system, predicting an overwhelming annual burden of over UGX 4 trillion for taxpayers by 2034 if significant reforms are not undertaken.

Akol raised these concerns during the presentation of the 2023/24 Annual Auditor General’s Report to Parliament on Wednesday morning. The report highlighted serious flaws, including overpayments amounting to UGX 31.2 billion in pensions and gratuities to various beneficiaries.

“The sustainability of our pension system faces mounting pressure from multiple fronts such as early retirement policies allowing exits at 45 years, enhanced pay for science professionals, and other systemic issues,” Akol explained. He projected a 12% annual rise in retirees over the next ten years, driving pension liabilities to exceed UGX 4.5 trillion annually by 2034.

Akol underscored that these trends could impose an untenable financial strain on the government and taxpayers if not addressed promptly. Key challenges highlighted in the report include early retirement policies allowing workers to retire as early as 45 years, which accelerates the number of retirees drawing from the pension fund. Improved pay packages for science professionals and other specialized categories have escalated pension obligations. 

Additionally, UGX 31.2 billion in erroneous disbursements to pensioners signals significant financial mismanagement. The Auditor General called on the government to implement comprehensive reforms to rectify the systemic inefficiencies in the pension system. Proposed solutions include raising the retirement age, tightening eligibility criteria, and enhancing oversight mechanisms to address overpayments and irregularities.

“The trajectory of pension liabilities highlights an urgent need for reform to ensure the system remains viable and equitable for future generations,” Akol warned. The report has been forwarded to the Parliamentary Committee on Public Accounts for further review and recommendations.