1. Good Practices in Social Security
Good practice in operation since: 2010
Government Employees Provident Fund’s Voluntary
Savings Retirement Scheme
A case of the Government Employees Provident Fund
Government Employees Provident Fund
United Republic of Tanzania
Published 2011
www.issa.int

2. Government Employees Provident Fund’s Voluntary Savings
Retirement Scheme
Summary
Background to the Scheme
Around only 6 per cent out of a 21 million active labour force in Tanzania are covered by
social security. This being a major challenge in achieving quality of life for all, the
Government Employees Provident Fund (GEPF) initiated the Voluntary Savings Retirement
Scheme (VSRS) to provide pension coverage to all Tanzanians irrespective of the type of their
employment.
Design
The VSRS was initiated on a pilot basis in November 2009 following a series of in-house
studies covering different economic players including farmers, small traders and organized
groups, with a major focus on self-employed people.
Main features
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no employee/employer relationship, which removes the need for double contributions;
no fixed amount of contributions: one’s contribution depends on the ability to pay;
no defined period for contributions: these can be daily, weekly, monthly etc.;
addresses current and future needs of the member.
Achievement
Members are recruited through a series of seminars organized by the Fund within targeted
areas. By 30 June 2011 the scheme had registered 6,555 members and collected a total of
Tanzanian Shillings (TZS)370.92 million (about USD232,000).
CRITERIA 1:
What was the issue/problem/challenge addressed by your good
practice? Please provide a short description.
Tanzania National Development Vision 2025 aims to achieve quality of life for all, among
other things. The extension of social security contributes to the attainment of quality of life. In
Tanzania, however, out of a 21 million active labour force only about 6 per cent are covered
by the existing social security funds. The low coverage is partly due to traditional approaches
which emphasize an employer/employee relationship, and strict contribution levels and
periods.
This initiative has revolutionized the situation in Tanzania through realizing the needs of
people in the informal sector and the self employed by addressing their income patterns, their
work culture, and their demands. The resulting special features are summarized below:

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There is no employee/employer relationship, which removes the need for double
contributions and which had previously been a major hindrance to extending coverage
in the informal sector.
In appreciation of the irregularity and seasonality of informal sector income, the
scheme allows flexibility in contribution amounts and periods. Members can
contribute daily, weekly, monthly or on specific periods. In addition, the amount to be
contributed can be varied from time to time depending on income at a particular time.
Members have two accounts, occupational and retirement. The occupational account
allows members to withdraw some of their contributions for current needs while the
retirement account is intended to cater for their needs in old age.
CRITERIA 2:
What were the main objectives and the expected outcomes?
The main objective is to extend coverage to informal sector workers and the self employed
who do not fit into traditional pension arrangements. Analysis of June 2011 data shows that
the scheme has achieved its goal of recruiting members from the self employed (informal)
sector. As at 30 June 2011, 90 per cent of the total members were from the informal sector
and only 10 per cent percent were from the formal sector.
Short-term objectives
Currently the Scheme is planned on a one year basis which will last until June 2012. The
following are objectives of the one year plan:
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register 22,800 new members;
collect and invest TZS2,853.68 million (about USD1.78 million);
conduct educational and awareness campaigns to inform the public about the scheme
and the importance of saving for their future social protection;
undertake further studies to understand the characteristics of the target group including
preferred benefits.
The Fund is currently working on the medium term plan for this new scheme which will be
for a three year period starting July 2012.
Note: TZS1,600 is about USD1.
CRITERIA 3:
What is the innovative approach/strategy followed to achieve the
objectives?
Important innovations that have been critical to the attainment of the objectives are:
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the use of two member accounts to address current and future concerns;
freedom to make contributions as and when appropriate to the member;
no restrictions on the amount to be contributed but focusing on the ability to save;
use of mobile phones, banks and agents to make contributions;

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informing members about their accounts every six months.
To ensure successful implementation of the scheme, new staff – fresh from university – was
employed to run the scheme. This was necessary because unlike the mandatory scheme, the
new scheme required constant follow up to build trust among the members but also more
intensive and aggressive marketing.
Effective collection of savings
The scheme allows members to deposit their contributions in different, convenient ways. The
main collection methods are Electronic Money Transfer Systems operated by mobile phone
companies such as M-Pesa which is administered by Vodacom in Tanzania. Other methods
are direct deposit into the Fund’s bank accounts; collection by the Fund’s staff from
members’ working premises; and collection agents who are contracted by the Fund to collect
on a commission basis. By 30 June 2011 the Fund had collected a total of TZS370.92 million
(about USD232,000). The collections have been increasing quarter on quarter since the
scheme’s inception: from as low as TZS7.45 million in quarter one to TZS120.39 million in
quarter seven ending in July 2011.
CRITERIA 4:
Have the resources and inputs been used in an optimal way to
achieve the set objectives and the expected outcomes? Please
specify what internal or external evaluations of the practice have
taken place and what impact/results have been identified/achieved
so far.
The Fund has defined metrics to measure and monitor the implementation of this scheme.
Currently the main metrics are the number of members recruited, members’ recruitment
success rate and collections made. Others metrics are clustering of recruited members and
collection success rates.
Recruitment success rate
This metric measures acceptance of the scheme within the targeted group during seminars: for
instance, out of 6,287 people who attended different seminars 3,436 – equivalent to 54.65 per
cent – joined the scheme.
Clustering of recruited members
This measures the category of members based on the economic activities with the intention of
ensuring the focus is maintained on the informal sector. By June 2011 clustering of members
was 51 per cent farmers, 23 per cent small traders, 13 per cent Savings and Credit
Cooperative Societies (SACCOS) members, 2 per cent taxi drivers and 10 per cent formerly
employed.
Collection success rate
Collection success rate is measured using two metrics, one based on the amount collected
against a set target and the second based on the number of members contributing per month.

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Based on the amounts collected against the target set, by June 2011 the average collection
success rate was 32 per cent and the highest level reached was 53 per cent.
CRITERIA 5:
What lessons have been learned? To what extent would your good
practice be appropriate for replication by other social security
institutions? Please explain briefly.
The following are some of the challenges encountered and lessons learned which are being
addressed in this financial year:
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generally low education and awareness about social security within the excluded
groups;
lack of a savings culture among the most targeted members;
high acceptance but low commitment to savings;
receiving and dependence attitude among the prospective members which prompts
most of the members to join with the intention of soliciting loans;
lack of prompt collection methods and record-keeping within organized groups and
villages;
long distances to M-Pesa shops and fewer Vodacom subscribers in villages;
few banks, SACCOS and other collection centres.
The scheme can be replicated by other social security organizations, especially those on the
African continent since they all have a huge informal sector. Most important however is to
study the income pattern of the target members and their social security requirements before
any attempt is made to embark on a scheme. A well detailed medium or long term plan should
thereafter be drawn up to guide implementation.