Why Do People Drop Out of the Contributory Pension Programme in Sri Lanka?

The sustainability and effectiveness of contributory pension systems in low-and middle-income countries depend not only on sound policy design and adequate financing but also on continuous participation and public trust, especially among informal sector workers. This study examines the reasons behind the persistently high dropout rates from Sri Lanka's contributory pension scheme, administered by the Sri Lanka Social Security Board (SLSSB), which targets informal and self-employed workers who have traditionally been excluded from formal retirement systems. Using a qualitative methodology, the research draws on semi-structured interviews with 15 individuals who had dropped out of the scheme and 10 government officials responsible for its administration. Stratified sampling was employed to ensure diversity across gender, occupation, and geographic location. Thematic analysis of the data revealed four key factors driving dropout: financial constraints, perceived inadequacy of benefits, lack of institutional trust, and limited awareness. The study also critically reflects on the post-COVID-19 context, which exacerbated financial vulnerability in the informal sector and exposed structural deficiencies in voluntary pension systems. Many contributors ceased payments due to competing short-term survival needs, rising living costs, and uncertainty about future payouts. The findings underscore the pressing need for policy reforms that focus on rebuilding public confidence, enhancing transparency, aligning contribution structures with income patterns, and increasing public awareness. These interventions are crucial to ensure greater retention and the long-term viability of contributory pension systems designed to secure old-age income for informal workers in Sri Lanka.