Evaluation of investment income of pension schemes in maximizing promised benefits to members: the case of social security providers in Tanzania.

The study aimed at evaluating investment income of Pension Schemes in maximizing the delayed enjoyment of promised benefits of members in Tanzania with a specific focus on five Pension Schemes operating in Tanzania Mainland namely NSSF, PSPF, PPF, LAPF and GEPF. GPS as an additional Scheme for political leaders has been discussed and analysed briefly. The main reason for this evaluation is centred on adequacy of benefits provided to retirees who abstain from current consumption for future consumptions. Pension Schemes on the other hand are obliged to meet members' expectations by guaranteeing them for income security when other means of earning income are not possible due to old age, death, illness etc. The question lying behind this concept is whether the benefits paid at the end really reflect members' expectations?. Data collected were both primary data from questionnaires and direct interviews of informed persons in pensions and finance and secondary data from Pension Schemes reports, journals, articles, presentations and statistics from the Central Bank. These data were analysed using a Statistical Package for Social Sciences (SPSS). Outcomes from this study show that there is a problem among Pension Schemes' formulae used to compute final benefits. Inflation erodes income from investments and real income is relatively small, areas of investments are confined in the environment that offer little returns, operating expenses are on the high side for all Schemes when compared to ILO suggested rates, absence and differences in accounts' reports is an obstacle in analysing data, lastly uncoordinated Pension Plans in the country has caused distributional effect. Pension Schemes may consider investing members' money in foreign currency to protect them from devaluations. Involving members in investments and transparency are highly recommended, pension in the country need reformation to bring about adequacy, equity and reliability. The Principal-Agent problems need to be addressed and Annual General Meetings are necessary for all Schemes.