Preparations of Ghanaian Formal and Informal Sector Workers Towards Retirement

Abstract

The study sought to compare retirement preparation among formal and informal sector workers. The study’s objectives are to: provide an overview of existing policies on retirement planning, profile state and other corporate institutions’ role in retirement planning, investigate formal and informal sector workers’ retirement aspirations and retirement planning information sources, articulate formal and informal sector workers’ instituted retirement plans and explore challenges encountered. Using explanatory sequential mixed methods, qualitative and quantitative datasets were collected from institutions and individual workers utilising key informant and in-depth interviews and survey. The datasets were managed and analysed using Nvivo and SPSS. The findings indicate that pension policy fosters a conducive enabling environment for retirement preparation. Formal sector workers anticipate retiring early, dependence on pension income, lump sum and paid work beyond retirement. Informal sector ones expect reliance on investment income, susu and children. Planning information was obtained from organisations, family and friends, yet awareness about the national pension system was poor among workers, especially the informal sector. Income facilitates retirement planning. Approximately 86% of the respondents were planning for retirement. Formal sector plans were financial and informal ones were semi-financial in nature. The implication of the resolution of industrial action in relation to pension fund management and salary increment cannot be ignored. Formal workers are well prepared for retirement compared to their informal sector workers. Occupational benefits may supplement individual plans. In conclusion, the study’s outcome has implications for the realisation of workers’ retirement goals, adequate planning knowledge, salary increment has effects on further retirement investments. Pay review using job evaluation which yields pay that is commensurate to work demands is recommended.