Factors that Positively Influence the Participation of the Informal Sector Self-Employed Workers Under the Tier-1 Scheme

Abstract

The informal sector plays a vital role in Ghana’s economy, employing a significant portion of the workforce. However, many self-employed workers in this sector lack social security coverage, leaving them vulnerable to financial instability in retirement. This study explores the factors that positively influence the participation of informal sector self-employed workers in Ghana’s SSNIT Tier-1 pension scheme. Using a mixed-methods approach, data were collected from self-employed workers in Nungua and Sunyani through surveys, interviews, and focus group discussions.

The findings indicate that key factors such as financial security in retirement, trust in the scheme, flexible contribution options, and peer influence positively impact participation. However, financial constraints, lack of awareness, administrative difficulties, and trust issues hinder enrollment. The study highlights the need for targeted policy interventions, including improved public education, simplified registration processes, and flexible contribution structures that align with the income patterns of informal workers.

Addressing these challenges can help policymakers and social security administrators enhance participation rates and ensure broader pension coverage for informal sector workers. Strengthening social protection mechanisms for this group is crucial for reducing economic vulnerability and promoting financial security in Ghana.