An Examination of Factors Impacting Informal Sector Workers Retirement Planning Behaviour in the Greater Accra Region of Ghana

Abstract

This thesis investigates the factors that influence retirement planning behaviour among informal sector workers in Ghana. Relying on the Theory of Financial Planning Behaviour as the underpinning theory, the thesis examines the effect of financial satisfaction, financial socialization, financial literacy, mental accounting, and financial cognition; and explores how these factors shape retirement planning intentions and behaviour. The research also examines the gap between retirement planning intentions and actual behaviour, providing insights into the unique challenges faced by informal sector workers in securing financial stability for retirement. A total of 594 valid responses were collected from informal sector workers across various occupations in the services, construction, and manufacturing sectors in the Greater Accra Region using a structured questionnaire. The hypothesized relationships of the study were tested using Partial Least Squares Structural Equation Modelling (PLS-SEM) technique. Results from the structural model analysis indicate that informal sector workers demonstrate a clear intention to plan for retirement, which strongly influences their actual retirement planning behaviour. Factors such as financial literacy, financial socialization, and mental accounting had a positive and significant impact on retirement planning intentions, which in turn partially mediated the relationship between these factors and actual retirement planning behaviour. However, financial cognition did not significantly influence retirement planning intentions or behaviour, suggesting that cognitive financial skills alone are insufficient for effective retirement planning in this population. Interestingly, the study also found a negative but significant relationship between financial satisfaction and retirement planning intentions, indicating that individuals who feel financially secure are less likely to plan for retirement. This thesis provides both practical and academic insights into retirement planning for informal sector workers. The findings emphasize the need for policymakers to promote financial literacy and develop pension schemes suited to the low and irregular incomes of informal workers. Financial institutions are encouraged to create flexible savings products, while practitioners can collaborate with communities to offer targeted financial education. Academically, the thesis explores factors like financial literacy, socialization, cognition, and mental accounting, offering a deeper understanding of the retirement planning challenges faced by informal workers. By applying the Theory of Financial Planning Behaviour, the study contributes new insights into how cognitive and social factors influence retirement planning, while also offering practical recommendations to improve retirement outcomes for this demographic.