Rwandans employed in the formal sector will pay 12 per cent of their monthly gross salaries, from the current six per cent, as part of pension reforms due to begin in January 2025.The Rwanda Social Security Board (RSSB) said pension contributions will be split equally between the employer and the employee as is the current practice. The reforms apply to employees in the public and private sectors. ALSO READ: Should RSSB increase pension contributions?The contribution rate is expected to increase further to 20 per cent of the employee’s gross salary by the year 2030, split equally between employer and employee, the RSSB said in a statement on Thursday, November 28.To facilitate a smooth transition to the 2030 target, the pensions body said, the increase will be implemented incrementally in four years, with a two per cent annual increase from 2027 to reach 20 per cent in 2030.The changes were announced in the wake of the adoption of a Presidential Order fixing the rate of contributions for the mandatory pension scheme approved by the Cabinet on November 9.ALSO READ: Retirees’ body appeals for matching pension with cost of livingCurrently, the total contribution rate is set at six per cent of the employee's basic salary, with the employer and employee contributing 3 per cent each.The six per cent contribution rate was established in 1962. It has not been updated since and life expectancy has increased from 47 years to 69 years as of 2022, RSSB noted.During a meeting with members of the Private Sector Federation on Thursday, RSSB CEO Regis Rugemanshuro said the pension reforms will contribute to economic growth and strengthen social security.“These reforms aim to ensure a sustainable pension system while unlocking opportunities for the private sector, especially small and medium-sized enterprises (SMEs),” Rugemanshuro was quoted as saying in the statement.ALSO READ: New platform to ease monitoring of pension contributionsTo harmonise contributions with the Rwanda Revenue Authority’s taxable base, the pension contribution base will expand from the basic salary and housing allowance to the total gross salary, which will now include transport allowances, RSSB stated.RSSB also said that starting in January 2025, the pension benefits package to retirees or pensioners will also be revised upward to “reflect the current cost of living, beginning with those receiving the lowest pension amounts.”
