ONLY a meagre six per cent of the country's workforce is covered by social security schemes, leaving a huge population without means to make life savings and have assured benefits at old age.
The country's estimated potential workforce is 55 per cent of the 45 million Tanzanians with those benefiting from social security schemes being salaried employees in the formal sector. As it stands, six per cent of the workforce only adds up to around 1.4 million people out of over 22 million who could benefit from social security schemes.
The benefits of social security schemes are far reaching as they enable people to save more and bolster the country's economy by increasing prospects of lending and investments.
According to PPF Pension Fund Director General, Mr William Erio, despite increased competition, there is still room to access more people to join pension funds and increase savings. To reverse the trend, he said, PPF has conducted a research and is currently eyeing those making a living in the informal sector such as taxi drivers, artisanal miners and fishermen.
Mr Erio was on a tour of Tanzania Standard (Newspapers) Limited (TSN) headquarters at Tazara area in Dar es Salaam. The major challenge with the informal sector, he observed, is the fact that many people have meagre earnings and are left with little to save after spending on necessities.
"Another challenge is the fact that unlike in the formal sector where employees enjoy top ups from their employers, the same cannot be said about the informal sector," he said.
To encourage more people to join social security schemes, pension funds have to be innovative, Mr Erio suggested, adding that the country can also emulate the Rwandan government which tops up the same amount that an individual in the informal sector contributes.
"We do not have to necessarily do it exactly the way it is done in Rwanda, but the central government can work with local authorities to see how they can foot the bill in their respective jurisdictions," he said. The government will have nothing to lose by topping up pensioners' contributions but in fact will gain more in terms of taxes.
The approach will also help in the formalisation of the informal sector in the country as many would like to join pension funds knowing they are saving for retirement but in the process they will be registering their businesses. He also said that PPF's total value at the end of last year stood at 1.07tr/- and it is projected to double in the next three years to December 2015.