The government of Rwanda has announced revised contribution rates for the mandatory pension scheme, as outlined in Presidential Order No. 086/01 of 12 December 2024 (the Presidential Order).

 

This new order replaces Presidential Order No. 009/01 of 10 May 2016, establishing a fixed contribution rate of 6% of the employee's remuneration since 2016.

 

The Presidential Order was published in the Official Gazette of the Republic of Rwanda on 13 December 2024 and took effect on the same date.

 

Key Changes in the Pension Reforms:

1. Increased Contribution Rate: The total pension contribution rate will rise from 6% to 12%, increasing contributions to employees' pension funds
2. Expanded Pension Contribution Base: Contributions will now be calculated on the total gross salary, which includes the basic salary, housing allowance, and transport allowances, aligning with the Rwanda Revenue Authority's (RRA) taxable base. This change simplifies administrative processes and ensures contributions are based on comprehensive earnings. This expanded contribution base is not contained in the gazette, however, this is communicated by the RSSB on the FAQ’s for the pension reform
3. Improved Pension Benefits: Existing pension recipients, particularly those in the lowest earning brackets, will see increased benefits, addressing concerns over pension adequacy.
4. Gradual Contribution Increase: An additional 2% increase will be applied annually over four years starting in January 2027, bringing the total contribution rate to 20% by 2030. While this may pose short-term challenges, it significantly enhances long-term retirement savings and financial security.
   

1. from 1 January 2025: 12%;
2. from 1 January 2027: 14%;
3. from 1 January 2028: 16%;
4. from 1 January 2029: 18%; and
5. from 1 January 2030: 20 %. 
   

 

Contributions Split:
Under Rwanda’s mandatory pension scheme, employers and employees currently share the contribution equally, at 3% each, making up the total 6%. Starting January 2025, contributions will increase to 12%, equally split at 6% each.

While the Presidential Order does not explicitly state how the contributions will be divided between employers and employees, the Rwanda Social Security Board (RSSB) communicated that contributions will continue to be shared equally. Employers may choose to support employees by covering the additional employee contribution, but where this is not feasible, employees will assume the adjustment.

These reforms aim to create a more sustainable and secure pension system, fostering economic growth and enhancing financial security for Rwanda’s workforce.