The impact of expected life assurance and pension benefits on household savings: a case study of middle income group in Dar es Salaam.
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Date
1998
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Publisher
University of Dar es Salaam
Abstract
The main objective of this study is to ascertain the impact of expected life assurance and pension benefits on other forms of household savings. This study is based on the substitution hypothesis which is consistent with the standard neoclassical theory that, similar products act as substitutes for each other. Primary data collected from Sinza as a representative area in Dar es Salaam are used in the analysis. A modified Ando-Brumberg-Modigliani life-cycle model is used and the ordinary least squares (OLS) technique is employed in the estimation of the parameters. The major findings show that expected life assurance and pension benefits reduce personal savings held in other forms. Its purport is that, expected benefits from the forms of social security are reasonably dependable for future consumption. In this case, there was lack of evidence to ascertain the theoretical ambiguity on whether changes in lifetime saving due to pension growth induce one to retire early or late. Policies that enforce lucrative business in pension schemes and life assurance are recommended. Among others, privatisation and creation of more competitive business environment have to be implemented for efficiency purposes. With economic changes arising from the current reforms, government withdraws from the business enterprises and the formerly freely offered services are gradually privatised. Government has to therefore, assume a role to educate the people on the importance of saving in social security schemes.
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Keywords
Pensions, Cost of living adjustments, Life, Insurance, Saving and investment, Tanzania
Citation
Aikaeli, J. (1998). The impact of expected life assurance and pension benefits on household savings: a case study of middle income group in Dar es Salaam. Master dissertation, University of Dar es Salaam. Available at (http://41.86.178.3/internetserver3.1.2/search.aspx?formtype=advanced)