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There is a growing debate in the literature as to whether social security systems established by government agencies in developing economies have the required strength to cater for the increasing proportion of workers upon their retirement (Topa, Lunceford, & Boyatzis, 2018). Up to 80% of the Ugandan workforce engages in the informal sector (UBOS, 2015). However, formal retirement schemes are limited to the armed forces pension scheme, public service pension scheme, the national social security scheme, and the parliamentary pension scheme, as well as a handful of informal retirement schemes (Ngabirano, n.d.). By implication, therefore, a significant proportion of the Ugandan workforce, most notably those in the informal sector, may not have access to pension funds upon retirement. A plethora of studies has established strong associations between financial preparedness for retirement with individuals' levels of financial literacy (Lusardi and Mitchell, 2007; Ntalianis & Wise, 2011; Hui et al., 2016; Yoong, See, & Baronovich, 2012; Aluodi, Njuguna, & Omboi, 2017). The bulk of such studies, most of which emanate from developed countries, have dwelt on financial literacy and its effects on financial behaviors associated with: - saving, borrowing, insurance, investment, and retirement planning in economies with developed formal financial markets.
The gap between financial literacy and financial preparedness has significant longterm financial implications on both individual social security and public social spending propensities. The total working-age population (14 to 62 years) in Uganda is estimated at 19.1 million, with a total working population of 15.1 million, representing 79 percent of the working-age population (UNHS, 2017). Nonetheless, as of 2015, only 10.2% of the total Ugandan labor force was covered by a pension/retirement benefits scheme. According to the Uganda Benefits Retirements Authority, as at 2015, the National Social Security Fund had 597,203 active members, the public service pension scheme had only 373,168 active civil servants, and pensioners, the senior citizens' grant (SCG) had only 123,153 beneficiaries receiving only 25,000 Uganda shillings a month. In contrast, other occupational schemes had only 24,174 subscribers (UBRA, 2015). This statistic denotes an inadequate coverage with less than 1 Million out of 15 Million workers, benefiting from employer-sponsored retirement benefits scheme. This statistic implies that over 14 million Ugandans must take individual initiative to plan for their retirement, or otherwise, they will be unable to meet their financial obligations during retirement and spend their retirement in poverty. The Uganda National Household Survey revealed that the levels of absolute poverty have increased from 6.7 million in 2012/13 to 10.1 million in 2016/17 coupled with a persistent decline in living standards and income distribution with no growth in consumption expenditure per adult between the two periods.