Inclusive Pensions for an Aging World: Evidence and Strategies for Engaging Informal Workers

Low- and middle-income countries (LMICs) are experiencing a demographic shift in which populations are rapidly becoming older. This shift is compounded by increased longevity and lower fertility rates, and its impact is exacerbated by traditional support systems becoming less reliable. Thus, financing a dignified life for the elderly has become a major global concern.

This Working Paper reviews how different countries have designed pension schemes for informal workers. It focuses on contributory schemes for the “missing middle”: informal workers who have sufficiently stable incomes to save for old age but lack access to suitable pension options. The paper draws upon public documentation and literature on how to target and scale pension schemes for informal sector workers.

Findings from the limited literature suggest targeting easier-to-reach groups first, leveraging informal sector networks, optimizing economic incentives, and comprehensively addressing behavioral and informational barriers to tackle the issue. The paper concludes that success ultimately depends on a new wave of applied research and rigorous experimentation to identify what drives informal workers’ participation in contributory pension schemes.