Pension enrollment in informal sector must be improved – CEO of Axis Pension Trust

Some stakeholders in Ghana’s pension sector have called for measures to improve pension enrollment among the informal sector of the economy.

Even though Ghana’s informal sector is made up of the biggest working  group, less than 2 percent of the people operating in that area have not signed on to any form of pension contribution.

Speaking at the second edition of the Pensions Strategy Conference organized by Axis Pension Trust, the Chief Executive Officer of Axis Pension Trust, Afriyie Oware said the only way Ghana can protect the vulnerable is to include the informal sector into the country’s pension scheme.

“Ghana is estimated to have over 10 million people in the labour force. Sadly, only 1.6m workers are covered by pension schemes”, he stated.

Mr. Oware is of the view that managing the situation through  Micro pension initiatives as proposed by the National Pensions Regulatory Authority, NPRA, is good, but that is a short-term intervention that may not be sustainable.

“A more sustainable solution lies in formalizing key informal sector businesses such as commercial drivers, restaurants, food vendors and mechanics through licensing, permits and regulations”.

Ghana’s informal sector

The informal sector is mostly made up of workers whose activities are not properly recorded or regulated, and they account for about 70 percent of Ghana’s economy.

These include traders, labourers and many others who earn wages on daily basis.

Even though efforts have been made in the past to include such people in the formal economy to improve tax collection and also enroll them onto a pension scheme, the efforts have yielded minimal results.