Research Paper Proposal
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Title: Pension Fund Management in Ethiopia: the case of Ethiopian Social Security affairs
Name of advisor: gerba…………. Prepared by
1. Hirut Fikadu
2.
3.
February, 2015
1.1 Background of the paper
Globally, there are a lot of people who need help to sustain their life and to fulfill their basic necessity. Especially, as they become old in age and their ability to generate income weaken the reliance of citizens on government increases. Government on the other hand should prepare a way to help the citizens. In essence, unless one takes a libertarian view, it is the role of the government to ensure that people do not reach old age being poor
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A pension plan, which is one part of Social Security, is a program set up by an employer, union or a government that provides regular income payments to retired payments meeting the conditions set forth in the plan (Abebe, 2003). As to meet the need of beneficiaries at retirement years, pension plans, require a sustainable fund. In any pension plan, pension fund is comprised of the assets accumulated to pay retirement incomes
In Ethiopia, pension plan as part of the nation’s Social Security programs give income security in old age, disability or death. The Ethiopian Social Security Agency (SSA), which is responsible for administering the plan, has potential to invest the pension funds due to its surplus funds and the nature of its long horizon liability. In light of the contingent and long-term nature of its financial obligations, SSA is expected to build and manage a portfolio that will generate long-term returns that contribute to the future pensions of today’s working members (Gebrehiwot, 2007).
1.2 Statement of the Problem
According to the 2003 International Social Security Association (ISSA) report that covers African countries including Ethiopia, it pointed out that, the investment of most of SSIs in Africa have registered negative real growth rates. This underperformance is attributed to a number of reasons, including macro-economic factors, unfavorable market conditions, poor portfolio planning, limited expertise
If the government helps people out then the standard of living would increase. Poverty could be diminished, health problems could be cured, and people would be able to afford leisurely activities putting money back into the government to help others out. Health care would be free and widely available to all to use. No having to pay for expensive prescriptions and doctors visits cutting back on the spread of diseases and sick people. Public property is used and is managed by a collective to benefit everyone in the community. All kids can go to school no matter their parents financial state giving them a chance to finish and go on to post secondary and get a good paying job. In Saudi Arabia and Sweden schooling is paid for by the government from kindergarten all the way to post secondary education. It benefits everyone because everyone can go to school regardless of their wealth. It inspires people to get a good education and a good job. Of course you have to have the marks to get into post secondary but its paid for. Studies have shown that people living in a collective society have lower crime rates than those who are living in a
government on the principles of society and the rights of man, every difficulty retires, and all
I think it would be great if the government could help the poor and create equality, however, I think poverty is inevitable. Also, if the government were to establish welfare systems, that would lead to the loss of human
Libertarians reject Utilitarianism’s concerns for the total social well-being. While utilitarians are willing to restrict the liberty of some for the greater good, libertarians believe that justice consists solely of respect for individual property. If an individual isn’t doing something that interferes with anyone else’s liberty, then no person, group, or government should disturb he or she from living life as desired (not even if doing so would maximize social happiness). They completely disregard concern for an overall social well-being. Using a libertarian’s perspective, a state that taxes its better-off citizens to support the less fortunate ones violates their rights because they have not willingly chosen to do so. In that same context, a theory that forces capitalists to invest in people and natural capital is immoral. Nevertheless, libertarians encourage that people help those in need, as it is a good thing.
There are many ways that governments have tried to fix this issue, one of them being social welfare. According to Hick (2005), welfare can be defined as "legislated documents that prescribe how income security and social services are to be carried out” or it can be seen as a philosophical idea or "an abstract set of principles that enable society to seek solutions to social problems”. An example of what is considered a social welfare state is Canada, due to their programs for income security and social security which are provided by the government to their citizens. Although Canada’s social welfare has been facing some problems due to citizens depending more on other organizations outside of the government, this is because of their rigid criteria
People need the government to guide and control them; for they can have freedom. The people need the government to direct and advised them, which will allow them to furish in a free society. Additionally,
increase when the company or the employees make additional cash contributions. Pension benefits are paid out when employees retire and this reduces the plan‟s assets. d. Pension expense is determined using the expected return on plan assets (not the actual return). The expected return on the assets reduces the expense. The pension plan assets are measured on the balance sheet each period at
Thoreau beginnings this essay by stating, “That government is best which governs least” (Thoreau 1). Many Americans that stand against the help of the government through programs including those like food stamps, would agree with this statement. While these programs are a magnificent way to help others, when the
Structural changes have paved the way for allowing SSA to become competitive and attract investment; such changes have helped fuel the productivity revolution by helping companies to achieve economies of scale (McKinsey: 2010). Such improved governance has seen a number of African firms moving from informality to formality (OECD: 2006).
Philosophers have struggled with determining the proper role of government. In the absence of government and laws, people could do whatever they wanted, and some of them would try to slaughter others and steal their property. This is the state called anarchy. People have realized that the safety of the people and the country would be in jeopardy in such a state. Thus, it is necessary for a country to have a government and/or ruler. However, a ruler must not have absolute power nor lack authority. But the protection of the people and the country alone is not enough for a country to prosper. The property and the natural rights of the people and the government must also be protected. Thus, the proper role of government is to protect the
Our company has been providing their employees with a pension plan for many years. However, these benefits plans have to be reviewed and possibly revised after the recent acquisition of XYZ Company. Through the use of a funding agency, payments are invested so that periodic payments can be made to the employee during retirement. Defined contribution and defined benefit are the two most common types of pension plans.
1. In a defined-contribution (DC) pension plan, the employee or employer, or both, make regular contributions to the plan. In the US, employees typically set aside a predetermined percentage of their earnings which is deposited to the plan and the employer will match that contribution. Ultimately, the amount of money available to the individual upon retirement is determined by the performance of their investments. Each employee retains the option to choose how to diversify their investments, while the employer will typically provide a “default allocation” option. The options available are generally very varied, and includes a number of index funds and actively managed mutual funds.
Pension funds are any plans, funds or schemes which provide retirement income. The money in them varies from some offering very little making it not worthwhile for their holder to retires, whilst others pay more than the employee has earned in his lifetime. Examples of the former are the present-day crisis with Chicago teachers who have found that their pension is giving them as little as 42,000 per year ((NYT Times (September 19, 2012) Next School Crisis for Chicago: Pension Fund Is Running Dry). Examples with the latter are the absurd instances of Yonkers, where policemen in their 40s are retiring on $100,000 pensions (more than their top salaries), or in California, where payments to Calipers, the biggest state pension fund, soared while financing for higher education was cut (ibid). The largest 300 pension funds collectively hold about $6 trillion in assets (Global Investment
Modern governments promise old age security, which ensures that their citizens can fend for themselves during old age. The approaches, however, may vary from society to society. In some like The United Kingdom and Canada, government pensions are distributed to the elderly. In some others such as Singapore, the people are compelled to provide in advance for their old age dependency. Some societies have laws in place to enforce children to take care of elderly parents. For example, in Singapore, elderly parents may file in to the court if their children do not provide for them. However, there are various financial concerns about these methods. In the case of government pensions, the heavy spending of public fund on the old aged may take a toll on other areas of the nation’s development. Thus a method that works in a society may not work in another and sometimes, multiple approaches have to be taken.
Social Insurance Principles: Is a social security administration where the resources are pooled together for meeting various contingencies, every one is included regardless of the level or risk exposure and the motive is social protection as opposed to profit maximization. Defined Contribution v/s Defined Benefits: Defined