Data from the FinScope Tanzania 2023 Survey also shows that eight percent of people expect their children to take care of them and two percent depend on money from friends and or relatives
Dar es Salaam. There is a need for multi-faceted approaches and collaboration among stakeholders due to the lack of retirement plans among more than a quarter of adults aged 55 and below in Tanzania, according to analysts.
This came to light after official data revealed that 28 percent of Tanzanian adults aged 55 and below have no retirement plans.
Data from the FinScope Tanzania 2023 Survey also shows that eight percent of people expect their children to take care of them and two percent depend on money from friends and or relatives.
The survey involved all adults (those aged 16 years or older) living in Tanzania, currently estimated to be 34.1 million or 55 percent of Tanzania’s total population of 61.7 million, according to the 2022 National Population and Housing Census.
However, according to the survey data, there is an increase in Tanzanian adults planning to rely on agriculture (farming and livestock) in the past five years from 19 percent in 2017 to 23 percent in 2023.
The number of people who plan to depend on their own businesses rose from 9 percent in 2017 to 15 percent in 2023.
Finscope data also shows that by 2023, regardless of the fact that nearly 30 percent of the Tanzanians are aware of the investment options in pension funds but uptake is recorded at only four percent.
Moreover, only two percent of adults aged 55 years and below have considered pension funds as their retirement plans.
“Pension fund uptake remains strongly linked to employment,” the report reads in part.
Senior consultant and economist Prof Samuel Wangwe recommended that pension funds can create a more stream of contribution for those in informal sectors, to contribute a small part of their income as a pension.
Some of the existing voluntary pension services in Tanzania specifically that cater to the informal sector include the National Informal Sector Scheme (NISS) which is under the National Social Security Fund (NSSF).
The scheme was established under the National Social Security Fund Act [Cap. 50 R.E 2018]
“Voluntary retirement schemes, such as having an individual account with social security funds or similar schemes can help individuals make informed decisions regarding their savings and investments for the future,” he said.
He said there are also other investment options that create a future income such as through financial markets and insurance.
Repoa executive director Donald Mmari told The Citizen that one initiative that the government can opt for is the implementing a comprehensive social security system
This is because many individuals with no retirement plans are out of the formal employment system and are involved in informal or self-employment activities.
“The system can include even those who are not employed and can contribute a small amount on periodical bases, and such a comprehensive system that involves everyone the government can create a safety net for retirees,” he said.
Dr Mmari added that the data also indicated gaps in education and awareness, especially financial literacy, in understanding the importance of retirement planning and its long-term benefits.
“We can also involve the public sector to innovate new schemes that are affordable and accessible even to those who have small incomes, however, this will need effective planning and regulations,” he said.
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