Factors influencing contribution evasion and its implications for social security pension schemes in Tanzania: the case study of NSSF

Social Security Pension Schemes are beneficial because they provide protection in cases of unforeseen or foreseen events such as old age, injury at work, death, disability and sickness. The main objective of this study was to examine factors influencing contribution evasion and its implications for social security pension schemes in Tanzania. The research employed a descriptive type of study that involved both qualitative and quantitative approaches. Three sample categories were involved in this study, which consisted of NSSF beneficiaries, NSSF officials and NSSF contributors. From the findings, factors that have significant influence on contribution evasion are: low utility value of future benefits, firms’ financial distress, low discounted value of benefits, low rate of return, employers’ and employees’ attitudes towards compliance, poverty of contributions, cost savings, employers’ and employees’ lack of awareness, loopholes created by the legal framework, inflation, high compliance costs and lack of government legitimacy. Data analysis indicates further that benefits offered by social security schemes, firms’ financial distress, poverty of contributors, law enforcement, and cost savings are the main factors that influence evasion of social security contributions.