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.
