Micro Pension Saving and Retirement Income of Informal Economy Workers in the Greater Accra Region, Ghana

Abstract

The study investigated micro pension saving (MPS) in shaping retirement income of informal economy workers with respect to enrolment mechanisms, motives for enrolling and the attitude towards pension saving. The study design used was cross-sectional survey. The sample was made up of 321 contributors of MPS, 334 non-contributors of MPS and ten key informants. Both quantitative and qualitative data were collected using interview schedule and interview guide. Using principal component analysis, multiple regression analysis and thematic analysis, the study concluded that more access provision, incentives and security result in increased informal economy workers’ participation in MPS. The dominant saving motive was found to be the bequest motive which inspires less pension savings. The study further found that computational capability and personal competence attitudes were significant in predicting the likelihood of informal economy workers contributing to pension saving. In addition, the study established that non-contributors of MPS have higher income compared to contributors of MPS. However, contributors of MPS were found to have higher perceived retirement income adequacy compared to non-contributors, even though no correlation existed between pension savings and income earned by contributors. Consequently, it is recommended for corporate pension trustees to take interest in the financial education of informal economy workers in order to shape their attitude and to create institutional structures to promote the culture of pension saving. Specific pension education on the need to save for old age income security through the media would reach out to thousands of informal economy workers who may be at risk of old age poverty if they have not saved yet for retirement.