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The Determinants of Dropouts from Voluntary Pension Scheme: Evidence from Sri Lanka

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  • Heenkenda, Shirantha

Abstract

This paper seeks to investigate the determinants of dropouts from the voluntary pension scheme (VPS) introduced by the social security board of Sri Lanka. A face-to-face questionnaire distribution was administered to clients of the social security board who subscribed to the VPS. Systematic random sampling techniques were used to survey the dropped out individuals and active members. A multivariate logistic regression model was used to examine associations between the independent variables and factors associated with the dropout decision. The empirical results show that most individuals lack awareness and knowledge of the pension scheme, even if they were active members of the VPS. Some significant factors are highlighted in the results explaining dropout. A higher number of household dependents has a positive contribution to the dropout. The study also highlighted that the income, assets, financial inclusion, financial literacy, and social capital factors have a significant influence for the discontinuation of their pension scheme. Strengthening service quality and extending the comfortable premium collection mechanism is a valuable strategy to increase the popularity of the pension scheme.

Suggested Citation

  • Heenkenda, Shirantha, 2016. "The Determinants of Dropouts from Voluntary Pension Scheme: Evidence from Sri Lanka," MPRA Paper 72481, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:72481
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    File URL: https://mpra.ub.uni-muenchen.de/72481/1/MPRA_paper_72481.pdf
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    References listed on IDEAS

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    Cited by:

    1. Heenkenda, Shirantha, 2016. "Readiness to retirement planning of estate sector employees in Sri Lanka," MPRA Paper 72744, University Library of Munich, Germany.

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    More about this item

    Keywords

    Financial Inclusion; Dropout; Social Security; Voluntary Pension Scheme;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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