RSSB Pension Reforms Raise Controversies
It has been 62 years since Rwanda last introduced pension reforms. The current mandatory pension scheme requires both employees and employers to contribute equally to the employee’s pension. Under this system, the total contribution rate is set at 6% of the employee’s basic salary, with the employer and employee each contributing 3%.
Starting in January 2025, the pension contribution rate will increase from 6% to 12%, with plans to gradually reach 20% by 2030. This increase will be shared equally between employers and employees.
Regis Rugemanshuro, CEO of the Rwanda Social Security Board (RSSB), highlighted the positive impacts these reforms will have on economic growth and social security.
“These reforms aim to create a sustainable pension system while unlocking opportunities for the private sector, particularly small and medium-sized enterprises,” he said.
Additional Benefits of the Pension Reforms
According to RSSB, the reforms are designed to enhance financial security for retirees, providing regular payments that help them maintain a stable standard of living after retirement.
The updated scheme also includes disability coverage, ensuring financial support for individuals unable to work due to disability. Additionally, it offers survivor benefits, ensuring that a pension contributor’s spouse, children, or parents are financially supported in the event of their passing.
The reforms will also introduce early retirement options under certain conditions. Contributors facing medical challenges will be allowed to retire early with reduced benefits, offering flexibility during health-related hardships.
RSSB emphasized that contributing now is an investment in future financial security—for both individuals and their families.
Mixed Reactions from Experts and Stakeholders
Following the announcement of these reforms, various stakeholders, including business owners, employees, economists, and journalists, shared their views.
Dr. Joseph Ryarasa Nkurunziza, Executive Director of Never Again Rwanda, expressed concerns on his X (formerly twitter) account. While acknowledging the rationale behind the reforms, he questioned the timing.
“The 2025 budgets have already been approved, and this increase was not accounted for. Salaries have not seen significant increases despite ongoing inflation,” he wrote.
“Given the inflation, it’s unclear how the private sector will manage to remain profitable while continuing to pay employees effectively,” he added.
Charles Kakooza Nkuriza, widely known as KNC, a businessman and Founder/Managing Director of TV and Radio 1, also voiced his objections. He criticized the increase in employee contributions from 3% to 6% without prior salary adjustments or consideration of rising market prices.
According to KNC, this move signals potential financial mismanagement within RSSB, suggesting that some of its investment projects may have failed.
“This shows that RSSB could be trying to recover lost money by increasing employees’ pension contributions,” he argued.
“I call upon Rwanda’s Parliament to summon RSSB and inquire about their investments. If any have failed, we need to understand the economic challenges we’re facing,” he added.
KNC also criticized the use of workers’ pension savings for unprofitable investments, calling it an unjust approach.
Some paid employees who spoke to us, opting to remain anonymous, expressed concerns over the recent reforms, stating that the reasons behind these changes remain unclear. They argue that while the reforms aim to address employees’ pensions and future well-being, they fail to account for the current challenges posed by rising inflation and the escalating cost of living.
According to these employees, there is no justification for increasing pension contribution rates without simultaneously raising salaries. They stress the importance of addressing the immediate financial struggles of employees before prioritizing future pensions.
Furthermore, they pointed out that the Rwanda Social Security Board (RSSB) should have engaged with pension beneficiaries before implementing these reforms. In their view, consultations would have provided an opportunity to explain the rationale behind the changes, outline the benefits, and adequately prepare employees and employers, rather than imposing the reforms without prior dialogue.
The pension scheme, first established in 1962, was designed for a demographic landscape where Rwanda’s life expectancy was just 47 years. And now through advancements in healthcare and living standards, life expectancy had risen to 69 years by 2022.
