Determinants of Pension Uptake in the Informal Sector of Tanzania

Abstract

Pension is important for persons in both formal and informal sectors of the economy. In developing countries, formal sector is much covered in terms of pension compared to informal sector though people employed in the two sectors are equally in need during retirement age. This study aimed at determining the factors for pension uptake in the informal sector in Tanzania, secondary data collected by FinScope Tanzania in 2017 were used. To determine the factors for pension uptake in the informal sector, the binary multiple logistic regression model was applied. The dependent variable is pension status and the independent variables include age, gender, highest education level, income, location, and main income generating activity. Individuals working in farming and fishing, trade, service provision, and casual work are less likely to uptake pension compared to informal salaried. Likewise, females are less likely to uptake pension compared to male category in the informal sector. Individuals at age forty and above are more likely to uptake pension compared to those aged less than 20 years. Middle and the two highest quintiles of income are more likely to uptake pension compared to those in the two lowest quintiles of income. Persons in urban are more likely to have pension compared to rural residents. Pension uptake is common to individuals with above secondary education, at least middle-income quintiles, urban residents, males, and those aged forty years and above in the informal sector.