In search of inclusion: informal sector participation in a voluntary, defined contribution pension system


Renuka Sane, Susan Thomas


This paper examines who contributes and who persists in contributing in a national, voluntary, defined contributory pension pro gram, where the government provides the incentive of matching contributions of a minimum amount (USD 16). The paper uses proprietary data from a financial services firm where 12 percent of customers (37000 individuals) chose to participate in this program. The evidence shows that only about 50 percent of contributors reach the minimum amount for the co-contribution, but that participants persist in contributing even if they failed to contribute the minimum amount in a given year. While this paper does not provide causal estimates, it does present evidence of considerable interest among the informal sector in a state-run voluntary pension program in an emerging market where access to formal finance is otherwise poor.

Citation: In search of inclusion: informal sector participation in a voluntary, defined contribution pension system, Renuka Sane, Susan Thomas. Journal of Development Studies, Forthcoming.

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