Why Museveni's bid to lower retirement age to 55 years could backfire

“The government’s current pension arrears are still high, while the savings on salaries of young and new civil servants will not be sufficient to cater for the pension expenses of retired employees,” said Rosemary Senabulya, executive director of the Federation of Uganda Employers, a private sector advocacy group.

The new measure is likely to affect 33,000 out of a total 254,159 civil servants on the government’s payroll as of April this year.

Trade union activists argue that the measure is insufficient to clear the current labour backlog, estimated in millions, and its cumulative growth.

“We need 500,000 jobs a year to meet the current demand. But there are still 60,000 unfilled jobs in the public service and the government is reluctant to fill them. There is a need to exploit vast employment opportunities in the railway business that tends to benefit thousands of people.

“Reduction of the retirement age to 55 will also hinder regional integration, as other member states are in favour of 60 years,” said Wilson Owere, chairman general of the National Organisation of Trade Unions.

Due to slow progression levels in Uganda’s civil service, many staff have found themselves serving at a single rank, both senior and junior, for long periods.

Though this slow rate of promotion is detrimental to their career progress, such employees have gained immense skills that could be lost through their hurried exit from the civil service.
Some of the employees have served over 15 years in critical positions, especially in the medical sector, while getting closer to retirement age.

On the other hand, new and younger employees in their early 30s, though more energetic, possess few of the skills needed in critical jobs in the civil service.

This scenario makes it difficult to absorb the majority of unemployed youth eager for such opportunities.

In addition, low entry salaries in the Ugandan civil service — equivalent to Ush200,000 ($90) per month for some positions — are deemed inadequate to meet the pension expenses of retirees in the medium term.

The current pension payments are partly calculated on the basis of final salary earned prior to retirement, which is usually much higher than entry level salaries.
Under the current reforms towards a contribution-defined scheme, as opposed to the traditional benefit-defined model, existing pensioners are paid out of contributions made by those still active in employment.

This requires closely matched claims and contributions. Civil servants will be required to pay five per cent of their monthly salary into a pension scheme under the new arrangement.