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The Case Of Ethiopian Social Security Affairs

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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…show more content…
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
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