The Government has tabled before Parliament a new pension Bill that will see salaries of public servants deducted, once the new Bill is passed into law.
Tabled yesterday, the new Public Service Pensions Fund Bill 2023, provides that every public servant will be required to make a mandatory contribution of 5% of his or her gross salary to the pension fund every month. Then the Government will contribute 10% of the employee’s gross salary, unlike currently, where the Government contributes 100% of the pension to public servants’ retirement package.
“In respect of an employee contribution, deduct from the salary of the employee five percent of the gross salary of that employee and in respect of an employer’s (Government) contribution, contribute 10% of the gross salary of an employee,” the Bill, tabled by Mary Grace Mugasa, the state minister for public service, reads.
The Public Service Pension fund will be run and operated just like the private sector’s National Social Security Fund (NSSF), which also provides for 5% contribution by the employee and 10% contribution by the employer.
The objective of the new Bill is to provide for the establishment of a public service pension fund and a public service pension scheme.
It also seeks to provide for the governance, functions organisation and management of the fund, to provide for the collection of contributions to the fund and payment of retirement benefits to pensioners and their survivors.
The Bill further seeks to provide for the investment of the monies of the fund and for related matters.
Currently, the public service pensions scheme, under the pensions Act, Cap .286, has presented a number of challenges relating to its governance, accountability and sustainability, owing to its noncontributory character by public servants.
“As a result of the sustainability challenge, the current public service pension service scheme has continued to suffer shortfalls in funding, which ultimately translate into accumulated pension and gratuity arrears for pensioners,” Muruli Mukasa, the Minister of Public Service, stated.
The Bill seeks to transform from a nonfunded, noncontributory pension scheme, to a funded and contributory pension scheme for public servants.
According to the new Bill, a person may be registered as a member of the scheme, if that person is an employee in the public service, who at the commencement of this Act, is left with more than five years to attain the mandatory retirement, which is 60 years.
An employee of the other public service, who elects to join the scheme and is not a member of a similar retirements scheme or an employee in the public service, who is left with five years to attain the mandatory retirement age and who elects to join the scheme.
According to the new pension law, the qualifying period for pension is at least 10 years of continuous service in a pensionable service or an aggregate period of at least 10 years in service in the public service, including the period an employee is on leave without pay or joined other public service. A member of the scheme also qualifies to receive pension from the fund on the attainment of the mandatory retirement age, on continuous service for 20 years in the case of service in public service, on attainment of 45 years of age and the qualifying period, upon death and having served a qualifying period. One also qualifies for the funds upon abolition of office, retrenchment from service or retirement on grounds of injury sustained on duty and on medical grounds, having served a qualifying period, among other grounds.
The new law provides that an employee retired from the service on the abolition of the office that the employee holds shall be entitled to pension and gratuity, regardless of the qualifying period for pension, if the employee is confirmed in the service. “An employee referred to, shall be paid an additional pension of 25% of the annual pension,” reads the Bill.
The Bill also provides that where a pensioner dies before the expiry of 15 years after the date of his or her retirement, the fund may continue paying the pension to the legal representative or survivor for the unexpired period of 15 years.
The non-contributory public service pension scheme existing immediately before the commencement of this Act, shall, within 12 months after the coming into force of this Act, cease to take on new members.
There are about 350,000 public servants on active payroll at local government, ministries, departments and agencies. It is estimated that 303,000 civil servants will switch to the contributory pension scheme. However, the proposed scheme will include all civil servants, with the exception of UPDF officers and men, as well as lecturers of public universities, who have their own schemes.