How Incentives Can Boost Pensions for Informal Sector Workers

Overview

In this paper, written in collaboration with D3P Global, we review pension programmes targeting informal sector workers in 11 emerging and developing economies. We emphasise the role of financial incentives in encouraging workers to save for retirement. Our results show that tax incentives alone are unlikely to attract a large number of informal sector workers, and that additional incentives such as matching contributions, bundling with insurance, or ‘second generation’ auto-enrolment are necessary. A second wave of pension programmes using some of these incentives has shown signs of success in a select number of countries. Based on this analysis, we make a number of recommendations on preconditions, incentives, product features and implementation for pension programmes for informal sector workers.

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