A few weeks ago, I spoke with a close family member who relies on a pension as his main source of income. With visible gratitude, he shared the news that his monthly pension recently increased. What struck me most was not the amount itself, but the sense of relief it brought him. That conversation left me with a lingering thought: how different old age would be if every Rwandan could count on a reliable income after retirement.

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Encouragingly, this aspiration aligns with the government’s vision, as reflected in ongoing pension reforms. In October 2025, the Minister of Public Service and Labour informed Parliament of plans to review key social security laws, including those governing pensions. More recently, the CEO of Rwanda Social Security Board (RSSB) reinforced this momentum by outlining strategies to expand social security coverage to all Rwandans by 2030.

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As these reforms unfold, I would like to contribute to the national debate by highlighting policy options to reduce the risk of old-age poverty.

The social security philosophy

The primary objective of a pension system is to provide income security during times of hardship. It ensures that individuals have a stable source of income when they can no longer earn due to old age, sickness, disability, or unemployment. In doing so, it plays a critical role in reducing poverty and protecting individuals and families from falling into poverty as a result of life-cycle risks and economic shocks.

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In standard practice, this is achieved through regular contributions made during working life, which later translate into benefits once a person is no longer able to earn. A social security system should therefore provide adequate income to enable beneficiaries to maintain a reasonable standard of living, while remaining financially sustainable over the long term. Beyond individual protection, such a system also promotes intergenerational and intragenerational solidarity by pooling and redistributing resources across life cycles and social groups.

Current pension landscape

Rwanda has made notable improvements in labour market conditions over the past decade, reflected in a decline in unemployment from 18.8% in 2016 to 11.7% today.

However, the social security system continues to face a fundamental challenge of limited coverage. This challenge is deeply rooted in the structure of the economy, where more than 80% of workers are engaged in informal employment. Many earn low, irregular, or unstable incomes, making regular contributions to social security difficult.

As a result, the mandatory pension scheme covers only about 10% of the workforce, leaving the vast majority without pension protection. This exposes many Rwandans to a high risk of retiring into hardship. Currently, one in four older persons lives below the national poverty line, underscoring the urgent need not only to expand pension coverage for the working-age population, but also to provide targeted support to older persons already living in poverty.

Expanding pension coverage

Expanding coverage through contributory pension schemes is a key pillar in reducing old-age poverty, as it enables workers to build income security during their productive years. However, a large share of the working-age population remains excluded from the pension system.

The Ejo Heza scheme, introduced in 2017 as a voluntary defined-contribution pension, was intended to address this gap. Enrolment is open to individuals already covered by the mandatory pension scheme. While this strengthens the scheme’s financial base, it does little to expand overall coverage. Contributions from already-covered members do not increase the number of new contributors, and dual enrolment risks diverting administrative capacity and public resources away from those who remain unprotected.

A further challenge concerns the targeting of government matching contributions. These subsidies are allocated using welfare categories that are outdated, infrequently updated, and reliant on community-based targeting methods that are prone to bias. As a result, some subsidies benefit individuals who can afford to contribute or are already enrolled in the mandatory scheme, while others go to people with irregular or no income who are unable to contribute consistently.

Together, these issues weaken the effectiveness of public spending and limit Ejo Heza’s contribution to expanding coverage. Government matching support should instead be targeted using income-based means tests. Priority should be given to workers with regular incomes who are not members of the mandatory pension scheme. This approach would expand overall coverage, improve contribution consistency, ensure more efficient use of public resources, and lay the groundwork for a feasible mini-mandatory pension scheme.

The case for a means-tested social pension

Although initial steps have been taken to support older persons, existing interventions remain limited in scope and coverage. In this context, expanding social assistance to poor and vulnerable older persons is critical. A universal social pension would be the ideal long-term solution, but fiscal constraints make it less feasible in the short to medium term. A means-tested social pension therefore represents a pragmatic and well-suited policy option.

Currently, 21% of the older population lives in poverty. A well-designed means-tested social pension that effectively targets this group could have a substantial impact, not only by reducing old-age poverty, but also by recognising older persons’ contributions to society and strengthening social solidarity and equity.

Financing such a scheme would require a significant fiscal commitment. Creating fiscal space could draw on general government revenues, pension fund investment returns, and intergenerational transfers through contributions from active workers. Importantly, benefit levels must be adequate to enable older persons to meet basic needs such as food, healthcare, and essential services.

The author is a research statistician and social protection policy analyst.