17 January 2025

Rwanda gazettes Presidential Order revising contributions to compulsory pension scheme

  • Rwanda has gazetted a Presidential Order (the Order) that revises the pension contribution rate to a compulsory pension scheme.
  • The Order sets out a phased increase in the contribution rate to the compulsory pension scheme with the initial increase from 6% to 12%.
  • The Order came into force on the day it was gazetted (13 December 2024) but the increase in the rate of pension contributions took effect from 1 January 2025.
 

Executive summary

Rwanda gazetted Presidential Order No 086/01 (the Order) on 13 December 2024, setting out the contribution rate to a compulsory pension scheme. The primary objective of the Order is to increase pension contribution from 6% to 12% split between the employer and employee.

This Order is part of Government reforms that aim to, among other things, strengthen social security for retirees, promote economic growth and address the rising cost of living for pensioners. The base for determining the pension contributions will also expand to include transport allowances, which was not the case in prior periods.

This Alert highlights key provisions of the Order.

Detailed summary

Contribution rate

From January 2025, compulsory pension contribution rate will increase from the current 6% (split equally between employer and employee) to 12%, with a target of 20% by 2030.

The adjustment will follow a phased implementation schedule as follows:

  • From 2025 to 2026: Contribution rates will increase to 12%.
  • From 2027 onwards: A 2% annual increment will apply, reaching a maximum of 20% in 2030.
  • The pension contribution base will include the basic salary, housing allowance and transport allowances.

Review of the contribution rate

The Order stipulates that the proposed rates are subject to review based on recommendations derived from an actuarial study of the compulsory pension scheme. Consequently, the rates may be adjusted during the set implementation period.

Enhanced social security and benefits

The reforms are meant to align with Rwanda's increased life expectancy, which increased from 47 years in 1962 to 69 years in 2022.

Further, the Government is expected to review upward pension benefits paid to pensioners.

Next steps

Employers and employees should consider the phased increase in pension contributions that took effect on 1 January 2025.

* * * * * * * * * *
Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young (Kenya), Nairobi

Ernst & Young Rwanda Limited, Kigali

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

Document ID: 2025-0277