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Pension coverage is a crucial indicator of a country or region’s pension sector performance. It measures the extent of people’s participation and contribution to pension schemes, as well as the receipt and benefit from pension benefits. However, pension coverage in Africa remains low and uneven, especially compared to other regions of the world. In this article, we’ll explore some practical and innovative solutions to expand pension coverage in Africa by 2030.

The Low Pension Coverage in Africa

According to the International Labour Organization (ILO), only 9.6% of the working-age population in Africa contributes to pension schemes, compared to 68.3% in Europe and Central Asia, and 46.2% in the Americas. Additionally, only 17.8% of the elderly population in Africa receives a pension, compared to 68.4% in Europe and Central Asia, and 54.7% in the Americas.

The low pension coverage in Africa is mainly due to the large and growing informal sector, which accounts for about 70-80% of total employment in Africa.

Practical and Innovative Solutions

To achieve universal pension coverage in Africa by 2030, the pension sector needs to adopt practical and innovative solutions such as:

Non-Contributory Pension Schemes

Developing and promoting non-contributory pension schemes such as social pensions or basic pensions provide a minimum level of income security for the elderly, regardless of their contribution history or income level. Non-contributory pension schemes can help reduce old-age poverty and inequality and incentivize contributory pension schemes.

Micro-Pension Schemes

Developing and promoting micro-pension schemes tailored to the needs and preferences of informal sector workers can increase their access and inclusion. Low and flexible contributions, simple and convenient payment and withdrawal methods, and diversified and attractive investment options can provide more choice and control over their pension savings and benefits.

Multi-Tier Pension Schemes

Developing and promoting multi-tier pension schemes that combine different types of pension schemes such as mandatory, voluntary, public, private, occupational, and personal can provide a comprehensive and balanced pension system. Multi-tier pension schemes can increase the coverage and adequacy of the pension sector and diversify and optimize the sources and risks of the pension sector.

Regional and Cross-Border Pension Schemes

Developing and promoting regional and cross-border pension schemes that facilitate the portability and mobility of pension rights and benefits can harmonize and integrate the pension sector. This is especially important for migrant and mobile workers who move within and across countries and regions.

Digital and Innovative Pension Schemes

Developing and promoting digital and innovative pension schemes that leverage technology such as artificial intelligence, blockchain, cloud computing, and biometrics can improve the access, efficiency, transparency, and security of the pension sector. Digital and innovative pension schemes can automate and optimize the pension sector processes and outcomes, as well as engage and communicate with pension sector customers.

Similar Article: Pension Scheme Types in Kenya

Conclusion

Expanding pension coverage in Africa requires commitment, collaboration, support, and guidance from all pension sector stakeholders, as well as international and regional organizations such as the ILO, World Bank, African Union, and African Pension Supervisors Forum.

By working together, we can create a more inclusive, sustainable, and dynamic pension sector in Africa that provides income security, and social protection for the elderly, as well as mobilizes long-term savings and investments for the economy.

Pension coverage is a crucial indicator of a country or region’s pension sector performance. It measures the extent of people’s participation and contribution to pension schemes, as well as the receipt and benefit from pension benefits. However, pension coverage in Africa remains low and uneven, especially compared to other regions of the world. In this article, we’ll explore some practical and innovative solutions to expand pension coverage in Africa by 2030.

The Low Pension Coverage in Africa

According to the International Labour Organization (ILO), only 9.6% of the working-age population in Africa contributes to pension schemes, compared to 68.3% in Europe and Central Asia, and 46.2% in the Americas. Additionally, only 17.8% of the elderly population in Africa receives a pension, compared to 68.4% in Europe and Central Asia, and 54.7% in the Americas.

The low pension coverage in Africa is mainly due to the large and growing informal sector, which accounts for about 70-80% of total employment in Africa.

Practical and Innovative Solutions

To achieve universal pension coverage in Africa by 2030, the pension sector needs to adopt practical and innovative solutions such as:

Non-Contributory Pension Schemes

Developing and promoting non-contributory pension schemes such as social pensions or basic pensions provide a minimum level of income security for the elderly, regardless of their contribution history or income level. Non-contributory pension schemes can help reduce old-age poverty and inequality and incentivize contributory pension schemes.

Micro-Pension Schemes

Developing and promoting micro-pension schemes tailored to the needs and preferences of informal sector workers can increase their access and inclusion. Low and flexible contributions, simple and convenient payment and withdrawal methods, and diversified and attractive investment options can provide more choice and control over their pension savings and benefits.

Multi-Tier Pension Schemes

Developing and promoting multi-tier pension schemes that combine different types of pension schemes such as mandatory, voluntary, public, private, occupational, and personal can provide a comprehensive and balanced pension system. Multi-tier pension schemes can increase the coverage and adequacy of the pension sector and diversify and optimize the sources and risks of the pension sector.

Regional and Cross-Border Pension Schemes

Developing and promoting regional and cross-border pension schemes that facilitate the portability and mobility of pension rights and benefits can harmonize and integrate the pension sector. This is especially important for migrant and mobile workers who move within and across countries and regions.

Digital and Innovative Pension Schemes

Developing and promoting digital and innovative pension schemes that leverage technology such as artificial intelligence, blockchain, cloud computing, and biometrics can improve the access, efficiency, transparency, and security of the pension sector. Digital and innovative pension schemes can automate and optimize the pension sector processes and outcomes, as well as engage and communicate with pension sector customers.

Similar Article: Pension Scheme Types in Kenya

Conclusion

Expanding pension coverage in Africa requires commitment, collaboration, support, and guidance from all pension sector stakeholders, as well as international and regional organizations such as the ILO, World Bank, African Union, and African Pension Supervisors Forum.

By working together, we can create a more inclusive, sustainable, and dynamic pension sector in Africa that provides income security, and social protection for the elderly, as well as mobilizes long-term savings and investments for the economy.

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