A well-functioning pension system is essential for economic stability and social protection in Guinea-Bissau. Yet, only 2.9% of the labor force is covered by pensions, leaving the vast majority—especially those in the informal sector—without a safety net.
The country operates two parallel pension schemes: a public one for government employees and a private scheme overseen by the National Social Security Institute (INSS). Both systems face significant challenges, including limited coverage, financial strain, complex administration, and governance gaps. Notably, the public scheme is heavily reliant on fiscal revenues, consuming 10% of the national budget despite being underfunded.
High informality in the labor market, rigid wage structures, and demographic pressures further limit the system’s sustainability. Recent efforts to modernize the INSS and introduce voluntary schemes for informal workers are positive steps but remain insufficient, with fewer than 400 informal workers currently enrolled.
The policy brief by UNDP outlines critical recommendations for reform: conduct a comprehensive actuarial assessment, establish a centralized pension fund, streamline administration, expand coverage—particularly for informal workers—and enhance transparency. Without urgent structural reforms, pension obligations will continue to constrain fiscal space and threaten long-term economic resilience.
Guinea-Bissau stands at a pivotal moment. By modernizing its pension system, the country can ensure financial security for its aging population while protecting vital investments in health, education, and development.