Voluntary Contributions to Pension Schemes: A Study Among Actors in the Informal Economy in Tanzania

Abstract

The research delves into the participation of informal economic actors in voluntary contributions to pension schemes. It sheds light on the difficulties faced by the Social Security Fund in reaching out to informal actors regarding membership and voluntary contributions. The study investigates the operations and strategies employed by informal social organizations, such as the bodaboda association, food vending network, and fishing group, to encourage members to contribute voluntarily. Through qualitative methods, interviews with pension scheme participants were conducted to comprehend the initiatives aimed at including excluded individuals, particularly those engaged in the informal economy. Following the NSSF Act 2018 revision, there is no alternative arrangement to provide coverage for informal workers besides the formal social security. This study contends that excluding a significant portion of the population from pension schemes limits social services in Tanzania. Informal economy actors willingly contribute to informal social organizations. The contribution assists in addressing the challenges associated with irregular incomes. It was observed that the administrative and regulatory structure designed for the formal sector is not conducive to informal actors, mainly due to bureaucratic processes related to contributions and provisional pensions.