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| Mr Erio |
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.
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.
Source: The Daily News, dailynews.co.tz, reported by Abduel Elinaza in Dar es Salaam
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