Projecting Tanzania pension fund system
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Date
2017
Journal Title
Journal ISSN
Volume Title
Publisher
African Journal of Applied Statistics
Abstract
A mandatory Tanzania pension fund with a nal salary de ned bene t is analyzed.
This fund is a contributory pay-as-you-go de ned bene t pension system which is
much a ected by the change in demography. Two kinds of pension bene t, a commuted (at
retirement) and a monthly (old age) pension are considered. A decisive factor in the analysis
is the increased life expectancy of members of the fund. The projection of the fund's
future members and retirees is done using expected mortality rates of working population
and expected longevity. The future contributions, bene ts, asset values and liabilities are
analyzed. The projection shows that the fund will not be fully sustainable on a long term
due to the increase in life expectancy of its members. The contributions will not cover the
bene t payouts and the asset value will not fully cover liabilities. Evaluation of some possible
reforms of the fund shows that they cannot guarantee a long-term sustainability. Higher
returns on asset value will improve the funding ratio, but contributions are still insu cient
to cover bene t payouts.
Description
Keywords
Pension fund; Pay-as-you-go; De ned bene t; Demography.