Challenges facing asset-liability management in Tanzania social Security funds comparative study of parastal pension fund and National Social Security Fund

Pension fund institutions in Tanzania had been subjected to a number of challenges particularly on Asset-Liability Management. These institutions usually invest to ensure that the duration of the investment portfolio is matched with the duration of the liabilities on an ongoing basis. Thus this study was intended to examine whether investment cash flows match with their corresponding liabilities and to examine the duration of pension assets and liabilities. Two research questions were formulated to analyze to what extent the investment cash inflows match with their corresponding liabilities and to what extent does duration between pension assets and pension liabilities differ. Secondary data from annual reports were collected to answer the formulated research questions. On the other hand, two alternative hypotheses were tested statistically. These were; investment cash flows do not match with their corresponding pension liabilities and duration of pension assets and liabilities differ significantly. The results showed that, there is a significant difference between investment cash flows and their corresponding pension liabilities in both pension fund institutions. At the same time, there is a significant difference between the duration of pension assets and pension liabilities of both pension fund institutions. Based on the fact that the perfect match does not exist and it may be administratively inconvenient to closely match pension assets and its liabilities as the cost of doing so may be high, stakeholders may try to allocate the optimal assets to contain the most suitable matching assets that exist. On the other hand, the government should try to reduce the taxation of income from investments, as multiplicity of various taxes such as withholding.