Increasing pension benefits will offset effects of inflation - retirees

Retirees have welcomed a new increase in their monthly pension benefits, saying it is an effort to counter the effect of inflation or the rising cost of living on their welfare. On January 24, the Rwanda Social Security Board (RSSB), announced that retirees in every category will receive an increment, based on the pensioners’ benefits brackets outlined in Article 4 of the presidential order increasing pension and occupational hazards benefits granted by the public entity. ALSO READ: Rwanda more than doubles minimum pension benefits for retirees Pensioners in the lowest benefit category will receive the highest per centage increase than those in other categories, with retirees in the largest income group getting the smallest percentage rise, following the adjustments made. For instance, the minimum annual pension benefits are set to rise by 159.3 per cent, or more than double, from Rwf13,000 to 33,710, while retirees receiving Rwf20,000 per month will get Rwf47,710, which is an increment of 138.5 per cent, or more than double the current amount. Beneficiaries receiving Rwf50,000 will see their benefits increase by 85.4 per cent to Rwf92,710, while those receiving Rwf1 million in monthly pension, will get an increase of 9.5 per cent to Rwf1,095,210. Faustin Minani, second vice-president of Rwanda Pensioners’ Association (ARR as its French Acronym), told The New Times that the increase is meant to deal with the impacts of inflation. He said that the higher percentage increase for pensioners who receive smallest benefits compared to others responds to the fact that when they were still employees, the value of the franc was relatively higher than the current situation, which means they had higher purchasing power. “The change made is an effort to adjust pension to the current value of the franc and maintain pensioners’ purchasing power,” he said. “We had requested that the focus be put on pensioners who receive less than Rwf50,000 [per month],” he pointed out. Though retirees who get Rwf100,000 and more per month, he said, the lower-earner category was the most hit by the rising cost of living. “If one was receiving Rwf13,000 and now their benefits have more than doubled, I cannot say they are 100 per cent satisfied, but it is obvious that the government has done its best; they tried to answer to the pensioners’ wish,” he said. ALSO READ: Retirees’ body appeals for matching pension with cost of living Clothilde Mukamulisa, a resident of Kamonyi District, told The New Times that with the increase in benefits, her socio-economic status is expected to improve. The now-68-year-old pensioner retired in 2012 – when the minimum retirement age was still 55 (before it was later raised to 60 under the 2015 pension law). Given that she was getting Rwf50,000 in monthly pension benefits, she will be getting more than Rwf92,000 following the new adjustments. “We received the pension benefits increase news with excitement,” she expressed. “With an additional amount, I will be able to make savings which will help me cover healthcare costs,” she said. ALSO READ: Senators seek increased pension benefits amid rising cost of living In the fiscal year 2023-2024, pension benefits amounted to Rwf53 billion paid to slightly more than 58,000 beneficiaries, according to data from RSSB. In December 2024, RSSB estimated that it would spend an additional Rwf12 billion or over 20 per cent of the total expenditure – per year to implement pension benefit increase decisions. As a result, the annual benefits payouts to retirees were expected to rise to Rwf65 billion. Why pension benefits increase matters According to ARR, a study carried out in 2014 showed that pension benefits were not matching with the prices on the market in Rwanda, indicating that their purchasing power was declining year by year – as a result of the rise in the cost of living. It recommended that the minimum pension be increased from Rwf5,200 then, to Rwf37,878. With the decision of 2018, the minimum pension was raised to Rwf13,000. ARR indicated that there was a steep increase in the prices of basic foodstuffs since 1995, up to 2016. Again, prices saw even higher increases within nine years up to 2025. For instance, the price of dry beans went up from Rwf130 a kilo in 1996 to Rwf700 in 2016, but now it is around Rwf1,000, while a kilogramme of meat (beef) was Rwf800 in 1995, and it rose to Rwf2,200 in 2016, then to more than Rwf5,000 currently (in 2025). It observed that pension benefits that were not corresponding to the cost of living were negatively affecting the living conditions of retirees and hindering their access to healthcare – as they could not afford the cost of treatment. The law governing the organisation of pension schemes in Rwanda, which was enacted in 2015, provides that a public entity in charge of a pension scheme shall carry out an actuarial study for the pension scheme at least once every five years. An actuarial study is a type of valuation of a pension fund’s assets versus its liabilities (including retirement benefits to be paid out to beneficiaries) to determine its status, risk management, and governance, for sustainability purposes. The law stipulates that based on the findings of the actuarial study, pension benefits may be increased; and where the actuarial study shows a possible negative impact on the economy, the number of contributions shall be increased based on legal provisions. Since the latest actuarial study was completed early 2022, according to RSSB, the pension fund has a task to at least conduct another valuation of the scheme within five years – by 2027.

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Increasing pension benefits will offset effects of inflation - retirees