Investment policies and financial performance: the case of pensions funds in Tanzania

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Date
2013
Journal Title
Journal ISSN
Volume Title
Publisher
University of Dar es Salaam
Abstract
Financial performance of a Pension Fund depends upon its investment strategy and asset allocation decisions of the pension fund. These depend highly on investment policy of a fund. It is important to carry a study on how investment policies influence financial performance of Pensions Funds in terms of liquidity, profitability, efficiency and leverage. The study was designed to analyze the financial performance of Pensions Funds in Tanzania. The study used secondary data to compare performance of each Fund. Published annual reports, investment policies and other desk materials were collected from the funds. These were the main bases of the study. Statistical results show that pensions fund performance differs significantly in terms of liquidity, profitability, solvency and activity ratios. The findings of the study revealed that pensions Funds also deviated significantly from their investment policies. Neither Flexible nor Strict Investment policies had an impact on the performance of the funds. The study found that, liquidity, profitability, efficiency and leverage of the Funds are highly affected by limited availability of profitable investment opportunities in the country. This cause the funds to deviate from their set up investment policies and therefore most funds are biased towards investing in government securities as they were regarded as liquid and having higher return than other alternative investments, From the findings of this study two recommendations are provided. First, the study recommends that the government though SSRA should allow the funds to invest abroad. This would provide an alternative solution to the problem of limited investment opportunities in the country. Second, the problem of non-compliance with investment policies should be sorted by setting policies which will give the appropriate mixture of assets and allow diversification and reflect the current economic situation of the country.
Description
Available in printed form, East Africana Collection, Dr. Wilbert Chagula Library, Class mark (THS EAF HG5847.M82)
Keywords
Investiments, Government policy, Manpower policy, Pension funds, Tanzania
Citation
Msafiri, R. (2013) Investment policies and financial performance: the case of pensions funds in Tanzania, Master dissertation, University of Dar es Salaam. Dar es Salaam.