PRESIDENTIAL ORDER N° 0 86/01 OF 1 2/12/2024 DETERMINING THE CONTRIBUTION RATE TO MANDATORY PENSION SCHEME
Rwanda’s mandatory pension contribution rate is scheduled to increase from 12% to 14%, effective January 1, 2027, as part of the country’s ongoing pension reforms aimed at strengthening the pension system and improving long-term retirement security.
The increase follows Presidential Order No. 086/01 of December 12, 2024, which provides the framework for gradually increasing pension contributions. The first adjustment took effect in January 2025, raising the total contribution rate from 6% to 12%.
How Will Pension Contributions Change?
Under the current framework, employees and employers each contribute 6% of the applicable pension contribution base. From January 2027, each contribution is scheduled to rise to 7%, bringing the total to 14%. Further increases are planned as follows:
| Year | Employee | Employer | Total |
|---|---|---|---|
| 2025–2026 | 6% | 6% | 12% |
| 2027 | 7% | 7% | 14% |
| 2028 | 8% | 8% | 16% |
| 2029 | 9% | 9% | 18% |
| 2030 | 10% | 10% | 20% |
Gross Salary as the Contribution Base
RSSB’s January 2025 communication clarified that the applicable pension contribution base includes gross salary components, such as transport allowances, rather than being limited to basic salary and housing allowance.
Employers should therefore ensure that payroll systems apply the appropriate contribution base and rates in accordance with the applicable regulations.
What Does This Mean for Employees and Employers?
The increase will affect both employees and employers. Employees’ pension contributions will rise from 6% to 7% of the applicable contribution base in 2027, while employers’ contributions will increase by the same proportion.
Although this means higher payroll deductions for employees and increased employment costs for employers, the reform is intended to strengthen the pension system and support retirement security over the long term.
Employers should plan for the scheduled increases, review payroll calculations and ensure compliance with the applicable requirements. Employees are encouraged to understand how the changes may affect their salaries and pension contributions.
What Should Stakeholders Do?
Employees and employers should follow official updates from the Rwanda Social Security Board (RSSB) regarding implementation, contribution calculations and any subsequent regulatory changes.
Conclusion
Rwanda’s phased pension reform will see mandatory pension contributions rise to 14% in January 2027, with further increases scheduled to reach 20% by 2030. Understanding the contribution schedule and applying the correct salary base will be essential for employees and employers as the reforms progress.
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