Assessment of participation of the informal sector in micropension schemes in Thulamela Local Minicipality, Vhembe District

Abstract

In South Africa, a significant portion of the workforce operates within the informal sector; however, it remains largely excluded from formal retirement savings mechanisms. This study examined the extent to which the informal sector is engaged in the micro-pension initiatives within the Thulamela Local Municipality, situated in the Vhembe District of the Limpopo Province. The aim of the study was to assess the participation of the informal sector in micro-pension schemes and to identify the key factors influencing uptake. The research adopted an interpretivist paradigm and implemented a qualitative methodology, adhering to an exploratory research framework. The investigation employed a non-probability sampling technique, specifically purposive sampling, to identify participants for comprehensive interviews. Data was gathered through interviews, which were recorded participants’ consent to ensure precise transcription and analysis. The data was analysed manually using thematic analysis. The findings indicated that the participation in micro-pension schemes is extremely low due to limited awareness and understanding. Nevertheless, in contexts where financial literacy and targeted outreach initiatives are implemented, participation rates are anticipated to be significantly higher. The study contributes to the existing body of knowledge by providing context-specific insights into micro-pension participation within a rural South African municipality, an area that remains underrepresented in the literature. The study was limited by its small sample size and focused on a single municipality, which restricts the generalisability of the findings. Future research could extend the scope to include other rural and urban municipalities, employing quantitative and mixed methods approaches to enable comparative analyses and enhance the generalisability of findings on micro-pension scheme participation.