TO ASSESS THE ADEQUACY OF BENEFITS OFFERED BY
SOCIAL SECURITY INSTITUTIONs IN TANZANIA
THE CASE OF NSSF, LAPF AND PSPF
By
Sixberty B. Malya
A Research Dissertation Submitted to Mzumbe University – Dar es Salaam
Business School for the Requirements of the award of a Master Degree in
Public Administration
2013
CERTIFICATION
The undersigned certify and herby recommend for the acceptance by Mzumbe University
Dar es Salaam Business School the research report titled: To Asses The Adequacy Of The
Benefits offered by Social Security Institutions in Tanzania: The Case of NSSF, LAPF
and PSPF, for the partial fulfilment of the requirements for the Master’s degree of Public
Administration.
______________________
Major Supervisor
________________________
Internal Examiner
_______________________
External Examiner
Accepted by the Board of
___________________________________________
CHAIR PERSON, FACULTY/DIRECTORATE BOARD
i
DECLARATION AND COPYRIGHT
I, Sixberty B Malya, declare that this dissertation is my own original work and that it
has not been presented and will not be presented to any other University for a similar
or any other degree award.
The literature and citations from other peoples’ work have been dully referred and
acknowledged in a text and Bibliography
Signature………………………………………
Date………………………………………………
© 2013, Copyright
This dissertation is a copyright material protected under the Berne Convention, the
Copyright Act 1999 and other International and National enactments, in that behalf,
on intellectual property. It may not be reproduced by any means in a full or in part,
except for short extracts in fair dealings, for research or private study, critical
scholarly review or discourse with an acknowledgement, without the written
permission of Mzumbe University, on behalf of the author.
ii
ACKNOWLEDGMENTS
This dissertation is an output of many hours of hard work and incredible support and
contributions from many people who in one way or other made its completion
possible. I would like to thank the people who helped me at various stages of this
research. The encouragement critics and suggestions they offered have been precious
and I am very grateful to thank all of them. It is not possible to mention all by names.
However, I am deeply obliged to mention a few by names on behalf of the rest.
My special thanks go to my family members, my father Boniventure Nicholaus
Mallya, My mother Hellen Mallya and my brothers Paschal B.N Mallya, my wife
Miromo Juma Mbena, Theobald B.N Mallya and Baraka B Malya, my sisters Zawadi
Mallya and Manka Mallya and other family members for their outstanding moral and
financial support to pursue this course.
I would sincerely extend my gratitude to lecturers of Mzumbe University who have
equipped me with knowledge and other necessary materials that have enabled ne to
accomplish this study.
Others are The LAPF, PSPF and NSSF staff members for their cooperation and
assistance in data collection process.
My colleagues such as Charles Tumaini Mnzava, Thuwaiba Hussein, Caroline
Makundi, Dativa Matari and Upendo D. Mmari who in one way or other they have
been helpful to me and my research. I thank them for their support.
To all; I say thank you and may God bless you abundantly.
iii
DEDICATION
This dissertation is dedicated to my lovely children Jonathan Sixberty Malya and
Jordan Sixberty Malya, my darling wife Miromo Juma Mbena, my father
Boniventure Nicholaus Malya, My mother Hellen B.N Mallya, my brothers Paschal
B.N Mallya, Theobald B Mallya and Baraka B Malya, my sisters Zawadi Mallya and
Manka Mallya; their prayers and tireless encouragement gave me everlasting
strength to accomplish this study.
iv
ABBREVIATIONS AND ACRONYMS.
ISSA -
International Social Security Association
ILO
International Labor Office
-
LAPF -
Local Authority Pension Fund
NSSF -
National Social Security Fund
PSPF -
Public Service Pension Fund
SSI
Social Security Institution
-
SSRA -
Social Security Regulatory Authority.
v
ABSTRACT
The importance of social security benefits comes from the ability of the benefit being
able to satisfy the needs and demand of the beneficiaries by the time they are going
to receive their benefits. Due to the demand of the people on adequate social
services, this study aimed at assessing the adequacy of benefits offered by the social
security institution in Tanzania. In doing so, this study had the following specific
objectives (a) to analyze the benefits administration in terms of coverage,
meaningfulness, equity, informed participation, compliance, administrative costs and
actuarial soundness. (b) to analyze the influence of customer satisfaction on the level
of meaningfulness of benefit offered and (c) to determine the influence of internal
competence of institution workers on the quality of service offered
Interviews, questionnaires and literature reviews have led to confirmation that social
security institutions are characterized by lots of inefficiencies. In terms of benefits
administration, there is a very low coverage, inadequate benefits which are not
indexed to get rid of the ill effects of inflation, poor involvement of members in
decision making, low levels of compliance and high administrative costs in relation
to contributions income. Furthermore, customer satisfaction cannot even be predicted
as a result of poor quality services. Consequently, one would conclude that the social
security institutions in Tanzania do not provide the benefits that have required
meaning to the members.
This study recommends that there is a need for the Social Security Institutions to
involve members in decision making; there is a need for Social Security Institutions
in Tanzania to make use of state of art technology by computerizing their operations;
There is a need to enforce the Laws, establishing the Social Security Institutions in
Tanzania so that registered employers and members will be heavily penalized if they
fail to submit contributions into schemes they are registered; and there is a need for
the Social Security Institution in Tanzania to increase their membership size by
extending their coverage into the informal sector where there is large segment of
working population.
vi
TABLE OF CONTENTS
CERTIFICATION ........................................................................................................ i
DECLARATION AND COPYRIGHT........................................................................ ii
ACKNOWLEDGMENTS .......................................................................................... iii
DEDICATION ............................................................................................................ iv
ABBREVIATIONS AND ACRONYMS. ................................................................... v
ABSTRACT................................................................................................................ vi
TABLE OF CONTENTS........................................................................................... vii
LIST OF TABLES ...................................................................................................... xi
LIST OF FIGURES AND DIAGRAMS ................................................................... xii
CHAPTER ONE ........................................................................................................ 1
1.1
Introduction .................................................................................................... 1
1.1.1
Tier One – Social Assistance Schemes ......................................................... 2
1.1.2
Tier Two - Mandatory Schemes .................................................................... 2
1.1.3
Tier Three - Voluntary or Supplementary Schemes...................................... 2
1.2
Statement of the Problem ............................................................................... 8
1.3
Objectives of the Study .................................................................................. 8
1.3.1
General Objective ........................................................................................... 8
1.3.2
Specific Objectives ......................................................................................... 8
1.4
Research Questions: ....................................................................................... 8
1.5
Significance of the Study................................................................................ 9
1.6
Scope of the Study.......................................................................................... 9
1.7
Limitations of the study.................................................................................. 9
1.8
Organization of the study ............................................................................. 10
CHAPTER TWO: LITERATURE REVIEW....................................................... 12
2.0
Introduction: ................................................................................................. 12
2.1
Definition of key Terms ............................................................................... 12
2.1.1
Social security .............................................................................................. 12
2.1.2
Adequacy...................................................................................................... 13
2.1.3
Poverty.......................................................................................................... 13
vii
2.1.4
Equity ........................................................................................................... 14
2.1.5
The right to social security ........................................................................... 15
2.2
Benefit .......................................................................................................... 16
2.2.1
Social security benefits................................................................................. 16
2.3
Theoretical Framework of Social Security Benefits .................................... 17
2.3.1
Related theory to social services ................................................................. 17
2.3.1.1 Maslow's hierarchy theory by Abraham Maslow ......................................... 17
2.3.1.2 Service quality Gap theory/ Model............................................................... 19
2.3.2
Adequacy of social security benefit ............................................................. 20
2.3.2.1 Social Security Coverage ............................................................................. 20
2.3.2.2 Adequacy Issues ........................................................................................... 21
2.3.2.3 Equity Issues................................................................................................. 22
2.3.2.4 Informed Participation.................................................................................. 23
2.3.2.5 Skills and Training ....................................................................................... 24
2.3.2.6 Administrative Costs .................................................................................... 25
2.3.2.7 Compliance Issues ........................................................................................ 25
2.3.2.8 Actuarial Valuation ...................................................................................... 26
2.4
Literature Review from Earlier Studies........................................................ 26
2.5
Research Gap................................................................................................ 28
2.6
Conceptual Framework ................................................................................ 28
CHAPTER THREE: RESEARCH METHODOLOGY ...................................... 31
3.0
Introduction .................................................................................................. 31
3.1
Research Design ........................................................................................... 31
3.2
Area of Study................................................................................................ 31
3.3
Population of the Study ................................................................................ 32
3.4
Types of Data ............................................................................................... 33
3.5
Measurement of Data ................................................................................. 33
3.6
Sampling Procedures and the Sample Size .................................................. 34
3.6.1
Sampling Procedure...................................................................................... 34
3.7
Data Collection Method ............................................................................... 35
3.8
Review of related Literature ......................................................................... 35
viii
3.8.1
Questionnaires .............................................................................................. 36
3.8.2
Interview....................................................................................................... 36
3.8.3
Self Administered Questionnaires ................................................................ 36
3.9
Data Analysis................................................................................................ 36
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS....................... 38
4.0
Introduction .................................................................................................. 38
4.1
Demographic characteristics of the respondents .......................................... 38
4.1.1
Respondent Age Group ................................................................................ 38
4.1.2
Education Level............................................................................................ 39
1.1.3
Experience .................................................................................................... 40
4.2
To analyze the Social Security benefits administration ............................... 41
4.2.1
Social Security Coverage ............................................................................. 42
4.2.2
Adequacy and equity social security benefits .............................................. 42
4.2.3
Informed participation of social security members ...................................... 44
4.2.4
Compliance rate of contributing members ................................................... 45
4.2.5
Administration costs of social security institutions...................................... 45
4.3
To analyze the influence of customer satisfaction on the level of adequacy of
benefit offered .............................................................................................. 46
4.4
To determine the influence of internal competence of institution workers on
the quality of service offered........................................................................ 47
4.4.1
Training ........................................................................................................ 47
CHAPTER FIVE: INTERPRETATION OF THE DATA AND
DISCUSSION ........................................................................................................... 50
5.0
Introduction: ................................................................................................. 50
5.1
Findings from research question one............................................................ 50
5.1.1
Coverage....................................................................................................... 50
5.1.2
Adequacy and Equity ................................................................................... 52
5.1.3
Informed Participation.................................................................................. 54
5.1.4
Compliance................................................................................................... 55
5.1.5
Cost of Administration ................................................................................. 56
5.2
Findings from research question two ........................................................... 57
ix
5.3
Findings from research question three ......................................................... 58
CHAPTER SIX: SUMMARY, CONCLUSION AND
RECOMMENDATIONS......................................................................................... 61
6.0
Introduction .................................................................................................. 61
6.1
Summary- ..................................................................................................... 61
6.2
Conclusion.................................................................................................... 62
6.3
Recommendations ........................................................................................ 63
6.4
Areas for further research............................................................................. 65
REFERENCE ........................................................................................................... 66
QUESTIONAIRE .................................................................................................... 70
APPENDIX I ............................................................................................................. 70
APPENDIX II ............................................................................................................ 73
APPENDIX III........................................................................................................... 77
x
LIST OF TABLES
Table 3.1: Selected Sample........................................................................................ 35
Table 4.1: Showing list of staffs on studies/training since 2008/9-2012 .................. 49
Table 4.2: Showing list of staffs on studies/training since 2008/9-2012 .................. 49
Table 4.3: Showing list of staffs on studies/training since 2008/9-2012 .................. 49
xi
LIST OF FIGURES AND DIAGRAMS
Figure 1.1:
Showing Social security institutions in Tanzania.................................. 3
Figure 2.1.
Summarizing Maslow’s Hierarchy of Needs ...................................... 18
Figure 2.2:
Conceptual Framework for effective social security benefits. ............ 29
Figure 4.1:
Respondents’ Age Profile .................................................................... 39
Figure 4.2:
Showing education Level of respondent ............................................. 40
Figure 4.3:
Depicting Respondents working experience ....................................... 41
Figure 4.4:
Showing Respondents answer on the satisfaction of social security
benefits. ............................................................................................... 44
xii
CHAPTER ONE
1.1
Introduction
Every human being is vulnerable to risks and uncertainties with respect to income as
a means of life sustenance. To contain these risks, everyone needs some form of
social security guaranteed by the family, community and the society as a whole. Such
socioeconomic risks and uncertainties in human life form the basis for the need of
social security. Social security is rooted in the need for solidarity and risk pooling by
the society given that no individual can guarantee his or her own security (URT,
2003). The concept of social security is broad with complex coverage. Social
security means any kind of collective measures or activities designed to ensure that
members of society meet their basic needs and are protected from the contingencies
to enable them maintain a standard of living consistent with social norms. The social
security concept has been changing with time from the traditional ways of security to
modern ones. As societies became more industrialized as a result of industrial
revolution in the 19th century and more people became dependent upon wage
employment, it was no longer possible to rely upon the traditional system of social
security. The negative impact of industrialization and urbanization attracted the
attention of policy makers to formalize social security system that addressed the
emerged social issues. Social security is defined in its broadest meaning by the
International Labour Organization (ILO) as: -
“the protection which society provides for its members through a series of public
measures against the economic and social distress that otherwise would be caused by
the stoppage or substantial reduction earnings resulting from sickness, maternity,
employment injury, invalidity, old age and death; the provision of medical care; and
the provision of subsidies for families with children (ILO 1984 cited in URT, 2003)”.
The ILO framework of social security is based on a three-tier structure, which seeks
to utilize various funding sources for provision of better protection to the country’s
population. This structure also seeks to address needs of different groups in the
society with respect to income and degree of vulnerability. The structure consists of
the following: 1
1.1.1
Tier One – Social Assistance Schemes
Tier One constitutes provision of services such as primary health; primary education,
water, food security and other services on a means tested basis. These services are
usually financed by the government and Non Governmental Organizations (NGOs).
1.1.2
Tier Two - Mandatory Schemes
Tier Two usually constitutes the compulsory and contributory schemes financed by
both employer and employee during the working life for terminal and short-term
benefits.
1.1.3
Tier Three - Voluntary or Supplementary Schemes
The schemes under Tier Three include personal savings, co-operative and credit
societies, occupational pension schemes and private schemes; managed by
employers, professional bodies, community based organizations and other private
sector actors (URT, 2003). The need for social security has been inherent feature of
human nature though the manner of providing social security has undergone changes
from ancient times to the modern age. In developing countries, the need for social
security in its modern concept has risen. This is the result of industrialization,
urbanization, and the weakening of the extended family system, which used to
provide informal economic and social security on a family basis, and also the decline
of kinship and group help available in clans and villages.
Unlike some countries, which have a single Social security institution, Tanzania has
several such institutions, which operate independently and are responsible to
different Government ministries. Currently, there are six major mandatory
government schemes that provide social security in Tanzania. These include:a. National Social Security Fund (NSSF) for employees of the private sector and
non-pensionable Parastatal and government employees
b. Public Service Pension Fund (PSPF) for central government employees
eligible to receive pensions
c. Parastatal Pension Fund (PPF) for employees of both private and Parastatal
organizations
2
d. Local Authorities Pensions Fund (LAPF) for local government employees
e. Government Employees’ Provident Fund (GEPF)
f. National Health Insurance Fund (NHIF)
g. Zanzibar Social Security Fund (ZSSF)
Social security institutions in Tanzania can be presented in the following model as
per the ILO framework of a social security system based on a three-tier structure:
Figure 1.1: Showing Social security institutions in Tanzania.
Source ISSA (2006)
By 2007, these schemes covered approximately 760,000 long-term beneficiaries,
representing only two percent of the total population or four percent of the total labor
force. The funds cover loss of employment, retiree benefits and workers’
compensation in the event of injury in the workplace. However, the benefits and
3
services offered by the funds fall below International Labour Organization (ILO)
minimum standards in terms of number, quality and their indexation to the current
levels of earnings (URT:2008).
These social security institutions operate under different rules and procedure and
their operations and benefits payment systems differ catering for different groups in
the formal wage economy. The result of this arrangement is fragmentation of the
social security industry. For instance, in terms of administration, these funds report to
different ministries: that is, NSSF reports to the Ministry of Labour and Youth
Development; PSPF and PPF report to the Ministry of Finance and Economic
Affairs; and LAPF to the Ministry of Regional Administration and Local
Government. In 2003, the National Social Security Policy was enacted to expand the
coverage of social security to the informal sector, and harmonize the existing funds
so as to reduce fragmentation and rationalize contribution rates and benefit
structures. This has led to the establishment of social security regulatory authority.
The policy envisages three major areas in the development of the social security
system in Tanzania: mandatory schemes; social assistance to vulnerable individuals
and groups which is non-contributory and means-tested; and voluntary market-based
schemes to provide coverage over and above the mandatory schemes (Ibid). Social
security in Tanzania covers a wider variety of public and private measures meant to
provide benefits in the event of the individuals’ earning power permanently ceasing,
being interrupted, never developing, being unable to avoid poverty, or being
exercised only at an acceptable social costs. The major domains of social security
are: poverty prevention, poverty alleviation, social compensation and income
distribution (URT, 2003).
In Tanzania the National Provident Fund (NPF) was established by Act No 36 of
1964 as a department under the Ministry of Labor and later on converted into
Parastatal organization in 1975. The NPF was later established to cover for the
employees in the private sector, the non-pension government employees and those
who are not covered by any social security program. The benefits offered under the
NPF arrangement include; the old age, survivors and maternity/marriage. Unlike
4
other provident funds in Africa, the benefits offered under the NPF arrangement were
very low, due to high administrative costs, low or negative rates of return, and the
failure to raise earning ceiling for the programs. Eventually, the NPF was converted
into defined benefit social security system under the National Social Security Fund
(NSSF) by the Act no.28 of 1997. Under the NSSF arrangements, members enjoy a
wide range of benefits that are in line with the ILO standards. There are total of
seven benefits offered under the NSSF arrangements; they are categorized into longterm and short-term benefits. The long-term benefits refer to pension pain to insured
person and/or survivors as a result of Old age, invalidity or death. Except for Funeral
Grants, all short-term benefits are enjoyed by the insured person while in
employment to compensate for the loss of income due to Maternity, Employment
Injury or Illness. Funeral Grants are paid to family members to compensate for the
burial services of the deceased insured person.
The Parastatal Pension Find (PPF) under the auspices of the ministry responsible for
finances is yet another social security institution in Tanzania. It was established by
the Parastatal Pension Act, 1978 to cover pensionable employees of Parastatal
organizations. The benefits offered under the PPF arrangement according to the Act
1978 includes; old age, death and gratuity. The ongoing economic reforms in
Tanzania have witnessed major changes in the ownership of Parastatal organization.
As the economies transformed from the state lead into private lead economy most
Parastatal organization were privatized consequently, the PPF Act became obsolete.
The fact that the PPF Act of 1978 became obsolete in the new economic model
resulted in a serious wrangle over the legitimacy on membership between PPF and
NSSF. By virtue of its legal framework, the NSSF had the right to register members
from the privatized Parastatal organizations; however, such situation threatened the
future of the PPF. The incessant dispute came to an end immediately after the
enactment of Parastatal Pensions (Amendment) Act, 2001 in which Parastatal
organization is defined to mean any body corporate established by or under any
written law. Further, the Act provides the legal right for PPF to register members
from the private sector and thus ending the long time monopoly of NSSF coverage in
5
the private sector. The PPF now provides; Old age benefits, Disability benefits,
Death benefits, Survivors’ benefit Gratuity benefits and Withdrawal benefits.
Social security institutions in Tanzania have to create living conditions that will
satisfy the general needs of the population. These services have to be offered on high
quality, which will satisfy members and attract new ones in these institutions, as it
provides for and takes care of the person and the entire society. It was expected that
the existence of various social security schemes across all sectors of the economy
would a sound social security administration in the form of coverage, adequacy,
equity, informed participation, compliance, administrative costs and actuarial
soundness. A sound social security administration is expected to deliver what can be
regarded as the adequate social security benefits’. Furthermore, customer satisfaction
and perceived quality service as reflected through quality personnel are also
considered to significantly explain the adequacy of social security benefit. Although
there are several social security institutions in Tanzania, we still see some complaints
which arose daily of people not being satisfied with the general operation of the
institutions. Such complains include those of the amount in terms of money given not
satisfying or meeting the current economic value or the service offered not being of
high standard due to being offered by unqualified personnel that is people have no
accurate training in a required profession. This in turn creates a sense of belief that
the service offered by social security institution are not adequate hence the need for a
study to try and give a proper and clear insight of the issue in hand.
According to Issa, (2006) Social security benefits offered by the three studied social
security institutions in Tanzania are in line with the defined contingencies under the
ILO Convention No. 102. The type of benefits and quantum offered by each
institution is discussed below.
National Social Security Fund (NSSF)

Old-age, invalidity and survivor’s pensions
Minimum replacement is 30 per cent and the maximum is 67.5 per cent of the
average insurable monthly earnings. Initial lump sum is equivalent to a
6
monthly pension multiplied by 24 months. Special lump sum to non
qualifying members which is equal to last contributions multiplied by the
number of pension credits.

Maternity benefits
Replacement is 100 per cent of daily earnings for 12 weeks. Medical care for
maternity related diseases from the 24th week of pregnancy up to 48 hours
after childbirth.

Employment injury benefits
Temporary disability is payable at the rate of 50 per cent of daily earnings
for a maximum of 26 weeks. Permanent disability is payable at the rate of 60
per cent of the monthly insurable earnings for a maximum of 84 months.
Assistance allowance is equivalent to 25 per cent of the benefits payable.

Funeral grants
Refund of funeral costs at the rates determined by the Board from time to
time.

Health insurance benefits
Health care services to the insured person, a spouse and up to four children
Public Service Pension Fund

Old-age, invalidity and survivors pensions
Amount payable equals 1/540 x complete number of months of services x last
annual salary.

Death benefits
Amount payable equals 1/540 x complete number of months of services x last
annual salary x 5 (payable once).

Withdrawal benefits
Amount payable includes employer’s and employee’s contributions.
Local Authorities Provident Fund (LAPF)

Withdrawal, retirement and survivors benefits
Lump sum payment which includes total contributions plus the applicable
interest rates.
7
1.2
Statement of the Problem
The main aim of social security was to help individuals maintain a reasonable
standard of living when faced with social and economic contingencies. There has
been an increasing recognition of the need to understand the adequacy of benefits.
Mangangila, (1976), Mataba, (1983) and Mlyansi, (1991) show that the amount of
benefits provided by various formal security schemes in Tanzania is insufficient to
avert poverty, social and economic distress and thus failed to provide adequate social
protection to members in distress. Moreover, these schemes are faced with a host of
other problems, such as the small rates of interest awarded annually to members, the
evasion of payment of premiums by employers and a lack of transparency, the
delaying of benefits and disparities in risks covered. It was from these factors that
one can question the adequacy of social security benefits and services in general
provided by these institutions. Therefore, this study wanted to establish the relevance
and usefulness of social security benefits and services offered to members.
1.3
Objectives of the Study
1.3.1 General Objective
The major objective of this research was to assess the adequacy of benefits offered
by these social security institutions in Tanzania.
1.3.2 Specific Objectives
i.
To determine the social security institutions’ administration in terms of
coverage,
adequacy,
equity,
informed
participation,
compliance,
administrative costs and actuarial soundness
ii.
To analyze the influence of customer satisfaction on the level of adequacy of
benefit offered
iii.
To determine the influence of internal competence of institution workers on
the quality of service offered
1.4
Research Questions:
a) To what level is the existing social security institutions’ administration
system delivers adequate social security benefits?
8
b) Are the social security members satisfied with the service offered by the
social security institutions and thus the adequacy of benefits offered?
c) To what level are the internal competence of the Social security institutions
influence the quality of service offered and thus the adequacy of benefit
offered?
1.5
Significance of the Study
Generally, the significance of any research study is either acquisition of knowledge
or problem solving. The envisaged results of this study shall, among other things:a) Add the body of knowledge to the scarce empirical literature on social
security benefits;
b) Provide basic information to the policy makers on having a common
policy, to be followed by social security institutions in Tanzania
c) Pose a challenge for the social security institutions to improve their
benefits; and
d) Act as a corner stone for improving the social security benefits offered
by the social security institutions in Tanzania.
1.6
Scope of the Study
This study was confined in analyzing the three social security institutions only and
how the social security institutions in Tanzania operate. The study involves
analyzing the social security benefits offered and the perceived quality of services.
The study covered the following major social security institution namely; the
National Social Security Fund (NSSF), Local Authorities Pension Fund (LAPF) and
Public Service Pension Fund (PSPF).
1.7
Limitations of the study.
Every study conducted in the world is expected to be prone to some limitations. For
the case of this study, several limitations affected the study. The limitations included;
1. A problem in willingness of the respondent to answer questions, since the
study was seen as an assessment on their ability in performing their duties. To
9
solve this, the researcher had to ensure the respondents that the data collected
are strictly for academic use only.
2. Another limitation was time, this is due to the fact that the time set by
university is little, and hence the researcher faced with a problem of time
shortage in the process of conducting the proposed research. To solve this,
the researcher had a clear schedule of all the activities intending to so as to
work under a deadline which enabled him to finish the work on time.
3. Apart from the above mentioned limitations, time and funds were also
another limitation that faced the study. This is due to the fact that, the
researcher was under no scholarship, and he had to raise his own money for
data collection and other expenses. Due to this, the researcher had to
effectively utilize the obtained funds to satisfy all the needed items.
4. Also this study was conducted in three institutions; NSSF, PSPF and LAPF.
Therefore, the data collected was limited to those three institutions only,
hence it is impossible to generalize this data to apply in other institutions. But
this study can be taken as a source of literature review for people intending to
pursue same kind of study in other institutions.
1.8
Organization of the study
This chapter has shown the nature of the problem under the study, the objectives and
significance of the study and the scope of the study. The questions that set the basis
for the structuring of the questionnaires have been provided, the importance of which
was to ensure that the information that would be collected meet the objectives of the
study gap.
This report is divided into five chapters whereby the first chapter covers background
to the problem, statement of the problem, hypothesis, objectives, and significance of
study, scope and limitations of study. The second chapter comprises of literature
review covering theoretical overview, conceptual framework and empirical review.
The third chapter focuses on the research methods and tools for data collection and
10
data analysis used by the researcher, including research design and sampling
techniques. The fourth chapter provides for the research findings and the last chapter
covers summary of the findings, conclusion and recommendations.
11
CHAPTER TWO
LITERATURE REVIEW
2.0
Introduction:
This chapter reviews literature on social security issues. It intends to provide the
relationship between factors related to social security operations in a way that
associates these factors to the adequacy of social security benefits. In the theoretical
framework, issues that have influence in the adequacy of social security benefits are
covered, these include; coverage, adequacy, equity, compliance, informed
participation, administrative costs and actuarial soundness. Some empirical studies
exist in the social security benefits and it was imperative to review such literature so
as to build a gap for which this study attempts to cover
2.1
Definition of key Terms
Social protection has evolved of time in terms of conceptualization and definitions.
These concepts and definitions have been adapted in the Tanzanian context
throughout the discussion in the NSPF. This section presents definitions of selected
concepts.
2.1.1 Social security
Much of the literature on social security in Tanzania has defined social security as
the protection provided by society to its members through public measures against
the economic and social distress which otherwise would be caused by the stoppage or
reduction of earnings arising from contingencies. In most cases the contingencies are
associated with either the temporary or the permanent loss of income (Haule 1994,
Omari 1994, Mallya 1994 cited in Mchomvu et al, 2002). Examples of contingencies
which could cause economic and social distresses include sickness, employment
injury and occupational disease, maternity, old age, invalidity, death and
unemployment. Such a definition does not adequately fit the socioeconomic context
of developing countries such as Tanzania. It overemphasizes the role of the public
sector and the related net costs and expenditures while overlooking social security as
an investment in human capital. It also provides limited guidance to effective poverty
alleviation. Most people in Tanzania are faced with insecurity caused by chronic or
12
structural poverty: This insecurity arises mainly from insufficient economic
development. But the removal of chronic social insecurity faced by the poor does not
remove the social insecurity associated with risks emanating from conventional
contingencies such as loss of employment, disability, old age and death.
The fundamental social security needs of the poor in Tanzania are the result of
chronic or structural poverty and only secondarily of conventional social insecurity.
An attempt to define social security should therefore take into account both the
conventional definition as well as the basic needs definition of social security which
portrays the situation in Tanzania. Holzmann and Jorgensen, (2000) offer such a
definition. According to them, social security consists of "public interventions to
assist individuals, households and communities better manage risk and to provide
support to the critically poor". Underlying this definition is the idea that social
security is both a springboard and a safety net for the poor. It regards social security
as an investment in human capital and focuses more on the causes than on the
symptoms of poverty. Finally, this definition considers individuals, households and
communities as vulnerable to multiple risks from different sources, both natural and
man-made. Based on the above definition, some social security issues can be
identified in Tanzania. These include poverty, equity and the right to social security.
Each of these key issues are discussed in turn. Social security issues in Tanzania.
2.1.2 Adequacy
A definition of adequacy could be worded as the ability of social security benefits
and services to meet people’s needs while being accessible and affordable
(International Social Security Association, 2011)
2.1.3 Poverty
Poverty in Tanzania remains pervasive. Studies conducted in the 1990s based on
surveys using random sampling techniques indicate that mainland Tanzania ranked
as the second poorest country in the world with a GNP per capita of US Dollar IOO.
Other studies based on household surveys estimated the per capita expenditure at
US$28 I, thus indicating an underestimation of the national income and expenditure
13
(Bagachwa, 1994 and Tinios et al, 1993). By whichever figure, most Tanzanians live
in poverty, though this is more widespread in rural than in urban areas (Jazairy et al,
1992; Tinios et al, 1993). The United Republic of Tanzania in 1999 published a book
on poverty and welfare indicators to assist researchers. According to this report,
poverty is a state of deprivation that prohibits a decent human life. Poverty results
from many mutually reinforcing factors such as lack of productive resources to
generate material wealth, illiteracy, the prevalence of diseases, discriminatory
socioeconomic and political systems, natural calamities such as drought, floods and
HIV and man-made calamities such as wars. Despite the literature on poverty in
Tanzania, most studies do not link poverty and social security policies and
programmes. Perhaps, the only exception is the study by the ILO in 1982. According
to this, the basic needs of Tanzanians were in danger of being eroded by the market
oriented policies advocated by the World Bank and the International Monetary Fund.
It advised Tanzania to pursue economic growth with redistribution as well as to
provide public welfare services so as to ensure the satisfaction of basic human needs.
Social security was not, however, perceived as one of the strategies needed for
poverty alleviation.
2.1.4 Equity
Equity denotes fairness or social justice. It implies that people's needs, rather than
social privileges, should guide the distribution of opportunities for well-being. Equity
requires reducing unfair disparities as well as meeting acceptable standards for
everyone. Pursuing equity in social security means trying to reduce unfair and
unnecessary gaps in social security, while working efficiently to achieve the greatest
improvements for all. In policy terms, therefore, we have to aim for social security
policies that are redistributive. This implies, firstly, the protection of the vulnerable
by systematically reducing inequities in the distribution of incomes and resources
through a guarantee of basic income and the conditions for living in dignity.
Secondly, it implies providing the conditions for autonomy, so everyone can
participate fully in their society. Thirdly, it implies enforcing, protecting and
legitimating social and political citizenship Tungaraza, (1988).
14
2.1.5 The right to social security
There is only limited information on the right to social security in Tanzania. The only
study on this aspect is the work by Tungaraza and Mapunda, (2000). They point out
that social protection is a human rights issue. According to Article 22 of the
Universal Declaration of Human Rights of the 10th December 1948 everyone, as a
member of society, has the right to social security. The State, therefore, is obliged to
ensure a minimum standard of material welfare to all its citizens on a basis wide
enough to cover all the main contingencies of life. This includes general basic social
support for all citizens, regardless of contribution or employment. In Tanzania, the
right to social security for all citizens is stipulated in the Constitution of the United
Republic of Tanzania of 1977, as amended in 1984, 1995 and 1998. Some of these
rights include the right to social welfare at times of old age, sickness or disability and
in other cases of incapacity. Tungaraza and Mapunda, (2000) argue that the reason
this right is not conferred upon citizens is due to a shortage of financial resources. In
addition, however, the lack of accountability, the lack of prioritization and
deficiencies in the enforcement of these rights has denied people their rights to social
protection. This right has not been realized because of a lack of awareness on the part
of the members of society. The second right to social security is the right to live and
to protection of life by society. Despite the existence of this right, many people have
died from sickness, hunger and floods. Moreover, many people still live in substandard housing, while many households do not meet their members' basic needs
because of economic hardships. Thirdly, Tungaraza and Mapunda, (2000) show that,
although contributors and beneficiaries of various social security schemes in
Tanzania have the right to participate in matters pertaining to social protection either
directly or through their representatives who are freely elected by them, in practice
these members do not directly participate in board meetings nor are they represented
by members who are freely elected by contributors of the funds. Contributors and
beneficiaries of various social security schemes do not have an opportunity to
influence the decision-making process and to monitor the administration of social
security schemes. The right to social protection conferred under the Constitution of
the United Republic of Tanzania of 1977, as amended in 1984, 1995 and 1998,
should also confer the right to benefits. Tungaraza and Mapunda (2000), argue that
15
the scale of benefits payable under the different schemes should be known to
members. Benefit formulae and conditions for payment should therefore be clearly
spelt out in the laws establishing the respective schemes. Protecting the rights of the
beneficiaries is the main responsibility of any social security scheme and benefits
should be paid promptly. Mechanisms for appeal should be established in law so that
aggrieved contributors and beneficiaries can pursue their rights.
Greenblott, (2008) categorized social protection in to four main groups. Firstly,
Protective social assistance for the poor such as disability benefits and old age
pensions. Secondly; Preventive measures to avert poverty such as food for- work
schemes, school feeding programmes, as well as measures to safeguard health,
including ART and prevention of mother-to-child transmission (PMTCT)
programmes. Thirdly; Promotional income enhancement through activities including
life skills, vocational and agricultural training for youth, as well as increasing access
to credit through microcredit opportunities. And lastly; Transformative addressing of
social inequity and exclusion through awareness campaigns, stigma reduction
campaigns, psychosocial support and therapy, and policies and laws to protect OVC,
for example protection of inheritance rights.
2.2
Benefit
Benefit is a payment made or an entitlement available in accordance with a wage
agreement,
an
insurance
policy,
or
a
public
assistance
program
(thefreedictionary.com). International Labour Organization set an instrument which
was adopted at its 35th session in June 1952, popularly known as ‘Social Security
(minimum Standards) Convention No. 102. Itemized number of contingencies and
benefits required in the minimum standards convention include’ Old Age, Invalidity,
Survivorship, Employment Injury, maternity, medical Care, sickness, Unemployment
and Death (URT, 2003).
2.2.1 Social security benefits
Social security benefits refer to a contract between an insured person and the insurer.
The insurer in this context refers to a public programme designed specifically to
16
provide protection against loss of income due to a defined set of contingencies.
(ISSA, 2006). Bandwe, (2009) categorized the benefits provide by SSIs in to long
term and short term benefits as follows;
 Short term benefits:•
Medical care
•
Sickness
•
Unemployment
•
Employment injury
•
Maternity
•
Family assistance
 Long term benefits:•
Old age
•
Invalidity
•
Survivorship
2.3
Theoretical Framework of Social Security Benefits
2.3.1
Related theory to social services
2.3.1.1 Maslow's hierarchy theory by Abraham Maslow
Maslow's hierarchy of needs is a theory in psychology, proposed by Abraham
Maslow in his 1943 paper A Theory of Human Motivation. In his theory, Maslow
argues that most people are motivated by the desire to satisfy specific groups of
needs. These needs include physiological needs; person’s needs for food, drink,
shelter, sex, clothing, and other physiological requirement. Safety needs; person’s
needs for stable environment relatively free from threats, meaning that needs for
security and protection from physical and emotional harm, as well as assurance that
physical needs will continue to be met. Social needs; person’s needs for affection,
belongingness, acceptance, friendship relations with others, and status within a
group. Esteem needs; person’s needs for internal esteem factors such as self-respect,
autonomy, and achievement, and external factors such as status, recognition, and
attention. Self-actualization needs; person’s needs for growth, achieving one’s
potential, and self-fulfillment, the drive to become what one is capable of becoming
(Cole, 2004).
17
Figure 2.1. Summarizing Maslow’s Hierarchy of Needs
Source: Cole (2004)
Cole, (2004) continues arguing that in his theory, Maslow points out that people
tend to satisfy their needs systematically, starting with the basic physiological needs
and then moving up the hierarchy. Until a particular group of needs is satisfied, a
person’s behavior will be dominated by them. In addition, Maslow separated the five
needs into higher and lower levels as he considered physiological and safety needs as
lower-order needs and social, esteem, and self-actualization needs as higher-order
needs.
So from this theory it is seen that the importance of social security comes in where
people thought of protecting themselves against any risks and vulnerabilities in the
coming near future. Although in the security part of his theory, Maslow covers lots
of things. The important aspect to note is that, in this aspect of security, Maslow
18
considers the well-being of person’s body, health, family and property which are
among the essentials in the social security institution benefits.
2.3.1.2 Service quality Gap theory/ Model
This model has two sides, viz the service provider and the customer side. The model
indicates customer quality perceptions are affected by a series of four distinct gaps
occurring in the organization. These gaps on the service provider’s side can impede
delivery of services that customers perceive to be of high quality. These gaps are;
Gap 1
Differences between customer’s expectations and management
perceptions of customer expectations
Gap 2
Differences
between
management
perceptions
of
customer
expectations and service quality specifications
Gap 3
Differences between service quality specifications and the actual
service delivered
Gap 4
Differences between service delivered and what is communicated
about the service to customers
According to this model, Customers judge quality relative to what they want. They
view a firm’s service quality by comparing their perceptions of service experience
with their perception of what the service performance should be. A service quality
gap results when service perception falls short of expectation. Defining quality in this
way is more discriminating than in the traditional concept of satisfaction. It is also
more consistent with quality principles and demonstrates high reliability and validity.
Gronroos, (1992) points out that customers become the focal point of the
development of service quality because in the marketing concept, customers come
first and that is what customers perceive as quality that is important. This became the
foundation of the confirmation/disconfirmation concept of service quality that is the
level of the quality perception depends on the degree to which quality expectations
19
are confirmed or disconfirmed by the customers’ experience of a given service. It is
from this that Gronroos developed this model.
Parasuraman et al, (1985) also developed a unique model of service quality.
According to this model, the quality of the services as perceived by the customer is
the result of comparison between the real life experience of the service delivered.
When experience exceeds expectations, the quality is high, and when experience
does not reach the level of expectations the perceived quality is low.
Since this study was about assessing the adequacy of the benefits and services
offered by social security, this model was important in seeing how the customer are
satisfied with forms of services offered by the institution and means under which
they can be followed to ensure services offered are of good quality and satisfies
customer needs. In understanding the quality and nature of services offered, methods
that were used to obtain such information from respondents included interview and
questionnaires.
2.3.2 Adequacy of social security benefit
The adequacy of social security benefits can be examined from a variety of
perspectives. For the purpose of this research, the adequacy of social security
benefits must reflect the basic objective of social protection which is to reduce the
margins of economic insecurity for individuals and their families arising out of
certain economic and demographic issues. For this to be realized, issues concerned
with coverage, equity, adequacy, informed participation, compliance, administrative
costs and actuarial soundness need to be addressed by any social security institution
with due respect.
2.3.2.1 Social Security Coverage
A social security programme provides an attractive option by utilizing basic
insurance principle. If the number of individuals in a pension scheme is sufficiently
large, morality tables of life expectancy can be constructed that show estimates of
average life expectancy at particular ages. Retirement preparation costs can be geared
to average life expectancy with the “excess” payments of individuals who die before
20
the average age going to those who live beyond it. The result is that no one has to
pay more than they would need to put aside personally if it was known with certainty
that they would live for a period of years equal to the average life expectancy.
Determining the extent of social security coverage is an often difficult but important
factor in assessing the success of social security programmes and perhaps the
reflection of adequacy of benefits offered. Issa, (1980) indicates problems associated
with social security coverage for workers in rural areas of developing countries. Such
problems include registration, compliance, record-keeping, estimating wages or
income in agricultural setting, delivering benefits etc. Furthermore, similar problems
arise when trying to cover workers in the “informal sectors” of the economy (ILO,
1985).
The situation in many developing countries may be characterized as growing
frustration in the face of an inability to move forward more rapidly to provide social
protection to a greater proportion of the country’s population. The coverage question
has been an issue of concern in most countries for decades and a topic of frequent
discussions at social security meetings (Alfredo, 1980)
The fact that social security programmes operate under social insurance principles it
suffices to put that social security programme is feasible with large numbers.
Therefore, there exist a relationship between social security coverage and the
adequacy offered.
2.3.2.2 Adequacy Issues
In
the history of social protection around the world, many social security
programmes have existed that pay few benefits or “generous” benefits to only few
(Schuls, 1993). Moreover, a particular social security programme is often one of a
number collective programmes operating to provide economic security. It is not
sufficient to view particular social security programme in isolation from these other
programmes. For example, eligibility or benefit determination under one programme
21
is sometimes related to benefits received from another programme that its benefits
are sometimes integrated.
Evaluating the adequacy of any particular social security benefits, it is necessary to
relate such analysis to a general framework for evaluating individual’s general
economic status and the variety of means available to achieve or change the status.
There might not be a complete agreement about the appropriate roles for various
means of providing income in old age. In developing countries, there are two major
considerations that are widely raised with the regard to the adequacy of the benefits.
On one hand, there is concern that benefits will be too small; on the other hand, there
is a concern that the benefits will be generous. Vitas and Skully, (1991) suggests that,
in countries with high inflation and unindexed benefit formulas or pension payments,
the real value of benefits have been eroded by inflation. This caused a capricious
redistribution of benefits from workers with long service and high incomes to those
with short service and high incomes to those with short service with low incomes.
Since the primary objective of social security benefit is to compensate the loss of
income due to social or economic distress. It is therefore imperative to analyze
adequacy issue with the amount paid to beneficiaries. Particular reference will be
made to amount the pension paid to pensioners from the social security institutions
covered in this study. It is expected that the amount of pension shall cover the basic
needs for the pensioner, short of that, pension as social security benefit has no any
meaning.
2.3.2.3 Equity Issues
Whether a social security scheme is perceived as fair depends in large measure on
how the scheme treats different customers and how these customers think they
should be treated. Issues of coverage and benefit adequacy generate a variety of
equity issues. Analyses of equity questions tend to focus on financing- how much do
the benefits received cost the customer in contract to other benefit recipients and,
possibly, non-recipients.
22
In this regard, an important consideration is the extent to which a Pension scheme is
designed to redistribute income within the relevant population (to achieve so-called
“social adequacy” objectives). In plans that redistribute major amounts of income,
there is generally a very weak link between a worker’s personal contributions,
payroll taxes and reduced wages (to pay for pensions) and the benefits the worker
ultimately receives. Yet the link between pay-in and benefits received is often the
major criterion for judging pension equity.
Another issue is the amount of “unintentional redistribution” that occurs in a plan.
“Unintentional redistribution may result from the effects of inflation on the
distribution of benefits within and across generations, but it may also be caused by
changes over time in the provisions or performance of different schemes (Vittas and
Skully, 1991)
For the purpose of this research, particular reference was made on how frequent
social security benefits are being adjusted to get rid of the ill effects of inflation.
Economic statistics reveal that the general price level is ever changing regardless of
the proposition of change. The Bank of Tanzania Monetary Policy Statement for the
year 2004/2005 reported the inflation rate of 6.5 percent as of April 2004. This
indicates the importance of social security benefits adjustments. Accordingly, it is
expected that social security benefits and pensions in particular get adjusted to reflect
the real income for pensioners. For pensions that have not been adjusted for more
than a year certainly they do not portray the intended meaning of social security
benefit.
2.3.2.4 Informed Participation
It is important that individuals know whether they are covered by a social security
scheme, what conditions of entitlement are, what benefits they (or their family) are
likely to receive what the risks of losing benefits are, and various other facts about
the scheme. Over the years, a large amount of evidence accumulated indicates that
there is great lack of knowledge and much misinformation among workers in various
countries with regard to expected benefits. As the number and variety of social
23
security schemes grow and many of these become more complicated, this problem
also grows. Therefore, assessments need to be made of the resultant impact on the
employees’ ability to understand the social security scheme and to realistically
incorporate its provisions into their planning especially the pre-retirement planning.
In Tanzania, most members of social security schemes are not well informed of the
Laws and Regulations governing the schemes to which they belong. The fact that for
an insured person to qualify for say a pension must contribute credits (15 years) is
not clearly understood by most people. Consequently, members tend to claim their
contributions while in temporary unemployment henceforth at the time of retirement
such people won’t qualify for pension and thus missing the important income to
sustain their living in the post retirement period. Particular reference therefore shall
be made to the rate of withdrawal in the social security schemes covered.
2.3.2.5 Skills and Training
One of the most important problems in social security organizations is the scarcity of
high-level, trained personnel. The social security schemes set up in the wake of
independence were often grafted on to a general administrative apparatus which,
given the shortage of skilled personnel, assigned the human resources available
primarily to those tasks regarded as priorities for the country’s future such as
building up and operating a central administration. As a result, the administrative
structure of social security funds was very often set up in haste with negative effects
that have tended to perpetuate themselves (Gruat, 1990). Contemporary social
security administration requires highly skilled management team. A well trained and
skilled management team is the key factor in determining the adequacy of social
security benefits through the perceived quality service and customer satisfaction. It is
important therefore that social security institutions arrange for training programmes
to their employees that will equip them with necessary skills and enable them
accomplish their mission in the social security industry. Particular interest shall be
analyzing the perceived quality service through the level of training acquired by
social security experts.
24
2.3.2.6 Administrative Costs
There has been concern raised in international circles with regard to the relatively
high administrative costs of social security organizations in various countries. While
it is difficult to compare large and small countries with wide range of different
programmes, those experts who have looked at the available data conclude that the
serious administrative inefficiencies in some countries are driving up costs and
absorbing an excessive amount of incoming revenues. Mesa-Lago, (1989) argues that
the percentage of administrative over total expenditure in the system is very high for
Latin America, fluctuating from 7 percent in Costa Rica, Chile and Uruguay to 10
percent in Peru and 18 percent in Mexico, percentage for above those in the
developed countries. The majority of administrative expenditures relate to the
remuneration of personnel, which is excessive in all of the countries.
From actuarial view, it is recommended a feasible social security scheme have the
administrative costs that lie between 3 and 5 percent of contribution income. From
this actuarial recommendation, it is expected that feasibility of social security scheme
and the adequacy of the benefit offered by that particular scheme must move in the
same direction. Accordingly, any social security scheme with administrative costs
above the recommended rate shall reflect poor security benefits offered by that
particular scheme.
2.3.2.7 Compliance Issues
One of the major issues of administration is non compliance by contributors in the
payment of contributions and the need for an adequate enforcement structure to deal
with the situation. Experience shows that substantial policing is often required to
ensure compliance among employers. Even where there is compliance, the payment
may be deliberately delayed, especially in situations where interest rates and/or
inflation are high (Schulz, 1993). In some countries non compliance is generally
ignored; in others the penalties are not significant enough to encourage speedy
compliance.
25
In Tanzania social security schemes, particularly those covering the private sector
have experienced low levels of compliance for most of the time since they were
established. Compliance is determined by the ratio of number of registered
employers to the number of those complying (those paying contribution). The ideal
situation should indicate a 100 percent compliance level indicating that all employers
comply. But, in practical compliance level have been low in fact very low to some
schemes where the level is below 50 percent. For the purpose of this resurface,
compliance level that reflect the adequacy of social security benefit is set at 80
percent, short of that such institution must have problems in payment of benefits as
20 percent of employers do not pay contribution so how is the scheme going to pay
benefits to members from those employers. Establishing legislations of the current
social security institutions have provisions that conflict in terms of operations (URT,
2003).
2.3.2.8 Actuarial Valuation
Actuarial valuation refers the process of assessing the current level of funding of the
social security institutions. This is done through comparing social security
institutions assets with liabilities accrued to the date of valuation and to determine
the level of contributions that need to be paid in future. To achieve the level of
funding necessary to pay out the benefits promised. Actuarial reviews are conducted
in intermediate periods to ensure that the fund is sustainable and this is reflected in
the projections are of a long time frame e.g. 25 years.
Actuarial valuation, therefore, plays a crucial role in the determination of adequacy
of social security benefits. It is only feasible schemes that are able to pay the
promised benefit and thus meeting the primary objective of social security schemes.
Particular interest shall be made in seeing how frequent the social security schemes
in Tanzania carry out actuarial valuation.
2.4
Literature Review from Earlier Studies
This section reviews the empirical studies conducted in the social security industry
with particular reference to studies conducted in the Tanzanian environment. Bossert,
26
(1987) conducted a study on traditional and modern forms of social security
institutions in Tanzania, pointed out that, the modern social security system, in many
developing countries, cover a small minority of the population namely the workers
and employees in regular (urban and industrial) employment. A large part of the
population that includes farmers, causal laborers and those self-employed outside
agriculture depend on traditional security.
Matto, (1995) studied the existence of traditional social security institutions that is
families, kinship and neighborhood in modern times. He concluded that the
effectiveness of these traditional institutions seem to have weakened due to
inadequate government policies. Government policies that tend to reduce away the
family units and kinship existed in the traditional social security institutions which is
the essence of informal sector (Magenda, 1990).
Changes in the traditional social security can significantly increase insecurity to
members of the systems. In view of this, Tungaraza, (1994) focused on changes in
traditional social security systems and their impact on women. Omari, (1994) studied
the plight of women in the society. He highlighted that formal security systems
benefit only a relatively small number of women while the majority have no access
to them. In areas where women are dominant, there are no developed formal
infrastructures.
Kaare, (1994) studied the end for a comprehensive social security in Tanzania, in
response to the adequacy of the existing system that is the National Provident Fund
(NPF).The adequacy was analyzed in two aspects; first the narrow coverage which
left large sections of the population uncovered (peasants, casual laborers, selfemployed outside agriculture) and second the monopoly of the scheme which limited
clients in the right to choose the type and form of social security scheme to be under.
Komba, (1997) conducted a study on the legal aspects relating to the NPF operations
in which he observed that social security activities in Tanzania lack legal backing.
Related to legal and policy framework is the effect of structural adjustment in social
27
security operations. Hauli, (1994) studied the impact of crisis and adjustment policies
on modern forms of social security in which he noted negative effects that lead to the
eroding of social security services (interest) to its members.
To ascertain the role of investment, income in social security administration is vital.
Several studies have been conducted to analyze various issues related to investment
activities of social security institutions in Tanzania. Masinda, (1997) examined the
way investment portfolios of NSSF, PPF and NIC were managed. On the other hand,
Kidula (1994) focused on profitability of estate investment in Tanzania the case of
NPF, NIC, and THB & NHC Parastatal. While, Metta, (2000) conducted a study on
the analysis of marketing strategies in social security institutions in Tanzania; case
study (NSSF).
2.5
Research Gap
For most of the studies so far conducted, the focus has been on changes in social
security arrangements and the effects of policy and procedures of social security
institutions in the delivery of social security services. It is noted, from the studies,
that no study has been conducted on the adequacy of social security benefits in
Tanzania. This study, therefore, addressed itself to adequacy of social security
benefits in Tanzania. In so doing, the study critically assessed the efficiency of the
social security schemes in Tanzania, taking into account the international standards
on social security.
2.6
Conceptual Framework
A conceptual framework is an assemblage set of research concepts cum variables
showing the logical relationships between dependent and independent variables
(Ndunguru, 2007). To understand the adequacy of social security benefits, it is
important to establish a conceptual framework based on what an effective social
security scheme should be like.
The conceptual framework of this study consisted of dependent and independent
variables, whereby dependent variable is the one that depends upon or is the
28
consequence of the other variable; and independent variables consist of those
variables that are antecedent to the dependent variable (Kothari, 2004). Under this
study, dependent variable was described as meaningful social security benefits while
independent variables consisted of informed participation, skills and training,
compliance and equity issues, administrative and adequacy issues.
Figure 2.2: Conceptual Framework for effective social security benefits.
Effective Social Security Schemes
Independent
variables
Dependent
Variable
Elements to be observed:
Adequacy and Equity
Informed participation
Adequate social security
benefits.
Skills and training
Compliance issues
Source: Developed by the Author (2013)
Administrative costs
The Assumption behind the Conceptual Framework
The independent variables (adequacy and equity issues, informed participation, skills
and training, compliance issues and administrative costs) and the dependent variable
(adequate social security benefits) have been taken into account by this study. The
assumption for this model is that when the scheme addresses affectively the issues
identified, there is increased possibility of making profits, hence providing
meaningful social security benefits to its members. For example:
29
a.
If the managing personnel and other employees are trained on the proper
administration of the schemes, there is the possibility of making rational
decision when administering the funds including better choices for
investment purposes, leading to the increase of profit to be shared to its
members in terms of providing better benefits.
b. If the administrative cost of the scheme is counter checked in the sense that
there is minimum expenditure of the funds, then there is the possibility of
saving money to be used for improvement of members’ benefits.
c. Also, if there are good policies and laws to ensure compliance by the
employers (contributors) through incentive and disincentive approaches, then
administration of the scheme will be effective with impact of minimizing
administrative costs and ensuring that members get their benefits depending
on the number of contributions made.
d. Moreover, if members of the public (beneficiaries and non beneficiaries) are
aware of the rationale of the schemes, then it is likely that more people may
subscribe or join relevant schemes. This would help to maximize capital of
specific schemes which if properly managed; there is likelihood of generating
income that may be used to provide better security benefits to all members
irrespective of employment status (equity of benefits).
30
CHAPTER THREE
RESEARCH METHODOLOGY
3.0
Introduction
This chapter presents details of the methodological approach to this study. It opens
with research design adopted and proceeds with justification for the selection of the
study area, study population, sampling procedures and sample size, and instruments
and methods of data collection. The chapter closes with methods used in data
analysis.
3.1
Research Design
Research design refers to the detailed blueprint used to guide a research study toward
its objectives (Aaker, et al, 2002). It is the arrangement of conditions for collection
and analysis of data in a manner that aims to combine relevance to the research
purpose with economy in procedure (Selltiz et al, 1962). The research design is the
conceptual structure within which research is conducted; it constitutes the blueprint
for the collection, measurement and analysis of data (Kothari, 2004).
The design of this study was determined by the nature of the problem which is
adequacy of social security benefits in Tanzania, a critical analysis. For the purpose
of getting adequacy of social security benefits in Tanzania, a descriptive design was
used complemented with inferential analysis. Three social security institutions were
involved namely; the NSSF, LAPF and PSPF. Both primary and secondary data will
be gathered. The primary data was used to analyze the overall adequacy of social
security benefits in Tanzania while secondary data was used to obtain social security
profiles. In specific, the study used data collection methods which include review of
related literature, questionnaires, and interviews. Also, the study used Statistical
Packages for Social Sciences (SPSS) as data analysis methods.
3.2
Area of Study
The study was conducted in Dar es Salaam Salaam region, Ilala and Kinondonidistricts because of easy accessibility with a good concentration and combination of
social security schemes namely; the NSSF, LAPF and PSPF. Also the area was
31
selected due to researcher familiarity, convenience and desirability to the researcher
in terms of the nature of the study, as well as financial and time constraints.
3.3
Population of the Study
Population refers to the total of the items about which information is desired. The
attributes that are the object of study are referred to as characteristics and the units
possessing them are called as elementary units. The aggregate of such units is
generally described as population. Sampling frame refers to the list of all elementary
units or group or cluster which may form the basis of sampling process. Sample
refers to the segment of population in which a researcher is interested in gaining
information and drawing conclusion. It is a group, hopefully representative, of the
population that is studied and from which one derives generalizations about the
population (Kothari, 2004; Babbie, 1992).
The population for this study consisted pensioners, contributing members and social
security experts such as lawyers and lecturers and staff from the social security
institutions involved in the Study that is NSSF, LAPF and PSPF.
In the study, the sampling frame was divided into major three groups; the pensioners,
contributing members and the social security experts. The first category consisted of
the pensioners; this included the retired people who collect their pensions through the
three social security institutions. The second category included the contributors;
these are the people who are employed and are still working in both private and
public sectors whose shares are collected from their salaries for accumulation. In
addition to that, the third category includes the social security experts such as
Lawyers, staff from these institutions, the public and lecturers from different
universities.
The selection of the required respondents was done by a combination of purposive or
judgmental which was used to select the group of pensioners, where the main reason
was to select a group of retirees who are able to answer the research questions,
stratified and simple random sampling techniques was used to select the remaining
group which contained staff members and other beneficiaries basing on their level of
32
education, experience and age. This is because of their large number; and also they
were stratified proportionally and selected randomly according to the departments
and sections where they are working to help the researcher to have equal
representation of workers from each department involved and section and avoid
element of biasness. Generally, the first category (pensioners) was selected through
simple random sampling; the second category (the contributing members, public and
staff from the three social security institutions) was selected through stratified and
simple random sampling. The third category (social security experts) was selected
through purposive or judgmental sampling because they had desirable characteristics
and variables needed for the study such as vast experience on the sector and are more
involved in policy making process.
Sample size refers to the exact number of items selected from a population to
constitute a sample. In selecting the sample size, researchers are advised to consider
factors such as nature and characteristics of the population, time and financial
implications, tools of data collection, as well as sampling procedures (Adam and
Kamuzora, 2008).
3.4
Types of Data
In this study, both primary and secondary data were used to expose the adequacy of
social security benefits. The primary data were collected from the field while the
secondary data were obtained from records of relevant authorities including; acts and
legislations, periodicals and annual reports.
3.5
Measurement of Data
The types of data sought in this study, were measured in either nominal, ordinal or
ratio measures. Nominal measures make use of variables whose attributes have only
the characteristics of exhaustiveness and mutual exclusiveness for instance gender of
the respond which can either be a male or female. Ordinal measures make use of
variables whose attributes may be logically ranked-ordered such variable include the
level of customer satisfaction which can be ranked from very satisfied to very
33
dissatisfy. Ratio measures made use of variables whose attributes are based on a true
zero point for instance the level of income.
3.6
Sampling Procedures and the Sample Size
The population for this study consisted of pensioners, contributing members and
social security experts from the social security institutions involved. Since the
population was heterogeneous, it was necessary to choose an appropriate sampling
technique that would reduce the sampling variance; in this case a stratified simple
random sampling technique was applied.
3.6.1 Sampling Procedure
The study combined purposive and simple random sampling. The population from
which the sample was obtained was decided by the researcher, for instance selecting
the literate pensioners who could understand and fill the questionnaire, the social
security institutions’ departments of customer care, policy and planning and legal
department and from the contributors the population from which the sample was
obtained was from the people with at least more than three years employed. Then
after this the population for this study was stratified into three strata namely; the
pensioners, contributing members and the social security experts. Then simple
random sampling technique was employed to select elements from each stratum to
ensure the representation of all members of the population to form a sample. That is
from each stratum which has a given population. Division of each stratum contained
group of respondents that could give responses to the research questions in this
study. The A sample of 193 respondents was covered which included 65 Pensioners
from the population of 10127 collecting their pensions from Post-Girocentre, 67
contributing members from private and public sectors from the population of 4336
and the remaining 61 social security experts from NSSF, LAPF and PSPF from the
population of 812. A total of 193 questionnaires were distributed to all respondents
of these categories of the sample study. Table 3.1 below shows population of the
study:-
34
Table 3.1: Selected Sample
Target Sample
Group
Male
Female
total
Pensioners
30
35
65
Contributors
37
30
67
Members of public
10
10
20
a) Lawyers
3
2
5
b) NSSF Staff
5
5
10
c) PSPF Staff
5
5
10
d) LAPF Staff
5
5
10
e) Doctors/Professors
3
3
6
98
95
193
Social Security Experts
Total
Source: Developed by the researcher (2013)
3.7
Data Collection Method
In accomplishing the objectives of this study, the following data collection methods
were used to collect the required information. The study employed various research
instruments in the data collection. These specifically included review of related
literature, questionnaires, and interviews. This included two major types of data,
primary and secondary data. The primary data are all about those data that are
collected as fresh and for the first time and these happen to be original in character.
The secondary data, on the other hand, are already collected data by someone else
and passed through statistical process.
For this study, under primary data, interview and questionnaire methods were used to
collect such data. While review of various related documents in these Parastatal fund
were used as secondary data collection method.
3.8
Review of related Literature
First, the researcher went through various documents at the three social security
institutions; NSSF, LAPF and PSPF. The documents reviewed were of necessary
35
data to the study and these included the type of social security schemes provide,
coverage, adequacy, adequacy and equity issues skills and training, compliance
issues and administrative costs (if available).
3.8.1 Questionnaires
Kothari (2004) described this method as having advantages that include; being free
from bias, respondent having more time to give well thought answers and respondent
that are not easily reachable can also be reached conveniently.
Three sets of structured questionnaires were used to collect the primary data from the
field. Each set was administered to a different sampling group namely pensioners,
contributing members and social security experts.
3.8.2 Interview
Interview is the data collection method which involves presentation of oral-verbal
stimuli and reply in terms of oral-verbal responses. This can be used through
personal interviews and, if possible, through telephone interview (Kothari, 2004).
The face-to-face interviewing method was applied whereby the researcher used both
the structured questions and unstructured ones. This method enabled the researcher
to get the inner feelings of the respondents about the overall adequacy of social
security benefits offered by the social security institutions in Tanzania.
3.8.3 Self Administered Questionnaires
In areas where the respondents were not available for interview, the researcher
applied the method of self administered questionnaires to get the required
information. This method enabled the researcher to get required information without
creating inconveniences to the respondents.
3.9
Data Analysis
Since the data of the research used descriptive design, the data were quantitatively
analyzed. Quantitative data refer to data ranging from simple counts such as
36
frequency of occurrences to more complex data such as test scores (Saunders et al,
2000). Quantitative data are based on meaning derived from numbers and their
collection results in numerical and standardized data. The quantitative data are
analyzed statistically which allow statistical influences to be obtained.
Therefore; data processing begun with editing and coding of the data. Thus, once the
questionnaires were collected from the respondents, the questionnaires were
inspected to determine their acceptability. Then, the questionnaires were be coded
with numbers assigned to each question. After that, the data were processed and
analyzed by the Statistical Packages for Social Sciences (SPSS).
37
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.0
Introduction
This chapter presents research findings them in relation to objectives and research
questions of the study presented in early Chapters. The chapter is divided into
different sub-sections according to the main issues being addressed as the objective
of the research entails. It starts with demographic characteristics of the respondent
then this is followed by the assessment of the adequacy of the benefits given by the
four social security Institutions that were researched in this study.
4.1
Demographic characteristics of the respondents
Demographic enquiries were conducted in the three Institutions (i.e. NSSF, PSPF
and LAPF) whereby the respondents’ demographic characteristics were grouped on
the basis of sex, age, level of education and occupation. The sample consisted of 100
males (51.8 percent) and 32 females 93 (48.2percent).
4.1.1 Respondent Age Group
Age composition of the respondent entails the well-being and succession of
responsibilities in the organization. Each organization, as assumed to be going
concerns, need to have good combination of power of varying ages. From the
respondents, it was established that; 10.4 percent were 20-30 years old, 11.9 percent
were 30-40 years old, 20.7 percent were 40-50 years old, 15.5% have 50-60 years
and the remaining 41.percent ranged from 60-70. Clearly, the respondents who were
40 years were the majority and thus the age composition was not bad or the research
as the answers were coming from people with experience on the benefits provided.
Also large percentage was the elders due to lack of risk taking initiatives, whereby
this group fear to lose their pension as they have worked for long time accumulating.
38
Figure 4.1:
Respondents’ Age Profile
50.00%
40.00%
30.00%
20.00%
Respondet
s Age
Profile
10.00%
0.00%
20-30
30-40
40-50
Respondets Age Profile
50-60
60-70
Source: Field data 2013
4.1.2 Education Level
Regarding the education level of respondents, the finding showed that 55 (28.5
percent) of the respondents had master’s degree, 67 (34.7 percent) had first degrees,
48 (24.9 percent) of the respondent said they had advanced diploma while 19 (9.8
percent) they were certificate holders. PhD holders were 4 which accounted for 2.1
percent of all respondents. This finding shows that most respondents had degrees and
master’s degree holders compared to other levels of education which is an indication
that the respondents who comprised of the study were qualified to provide the
required responses for the study. The findings are summarized in figure 4.2 as
follows:
39
Figure 4.2: Showing education Level of respondent
2%
10%
28%
Certificate
25%
Advanced diploma
First Degree
Masters Degree
35%
Phd
Source: Field data (2013)
1.1.3 Experience
Information on the respondents’ duration in employment shows that 4 (9.1 percent)
of the respondents have been in employment for less than three years, one had been
in employment between 4-6 years, 19 (43.2 percent) of the respondents had been in
office for 7-10 years, while 20 (45.5 percent) of the respondents had been in office
for more than 11 years. Figure 4.3 shows the findings below:-
40
Figure 4.3: Depicting Respondents working experience
10.40%
1-3 years
38.20%
29%
4-6 years
22.20%
7-10 years
11 and above
Source: Field data 2013
For management employees, 40 percent of the respondents had been in organization
between 7 to 10 years while 60 percent of them have more than 11 years. As shown
by the above figure, most of the respondents are in employment for quite some years.
This also implies that most of the respondents have longer experience in this industry
hence provision of accurate information concerning the topic due to their vast
experience in the institution and the sector in general.
4.2
To analyze the Social Security benefits administration
This section is concerned with social security benefits administration. This section
mainly explains about social security coverage, adequacy and equity social security
benefits, informed participation of social security members, compliance rate of
contributing members and the administration costs of social security institutions.
Both primary and secondary data were utilized to come up with the results of the
above mention aspects.
41
4.2.1 Social Security Coverage
This basically aimed at understanding the amount of members that the institutions
(NSSF, LAPF and PSPF) cover in the whole country. The reason for this is due to
the principle of social security which the proponents of this theory argues that a
social security system is viable with large number of insured person and the main
focus of every social security system must be to increase its members coverage. The
basic reason for emphasizing on the coverage is due to the risk pooling, which can
only be possible with large members, who will be contributing into the system
without much burden.
This is mainly concerned with the number of people on which the social security
institution covers. Coverage is more important in Social Security because, it helps in
solving the problem of risk pooling, that is the larger the people are involved in the
scheme, the less the contributing burden that the members will be faced with.
In this section data collected showed that, In Tanzania, out of 44,929,002 people and
literacy rate up to total population of 69.4 percent (2012 census report), only
911,923 which is equal to two Percent of the country population are the ones that are
covered with social security schemes studied. This is basically due to the fact that
benefits in large percent are given to the formal working class only. Hence, there is a
need to device a new means to accommodate other people especially those in
vulnerable groups such as orphans, old age widows etc. that are not in the working
class and not covered with the schemes.
From there, the researcher was interested in understanding the general distribution of
workers among the three Social Security Institutions that are covered in this study.
The result was as follows; out of 45,000,000 people, 501,200 are covered with
NSSF, 300, 578 PSPF and 110,145with LAPF all summed to 911,923 people
covered by the three studied SSIs.
4.2.2 Adequacy and equity social security benefits
In terms of adequacy, the researcher was interested to see if the benefits given are
adequate to customers. The reason for understanding this is because, to measure the
42
adequacy of the service one must also understand the amount given to beneficiaries
as benefits. In this the researcher started by researching about the maximum and
minimum benefit given by Social Security Institutions in a month. In this, it was
realized that, the maximum and minimum rate depends on the amount of deductions
made out of the salary.
In terms of equity the researcher was interested to see how the benefits given by the
social security Institutions are considerate to its members. In order to understand so,
the researcher asked the respondents to answer if the benefits given were satisfying
to contributors by consideration the present socio-political and economic situation at
that particular time and the duration they have contributed in these schemes. The
results in this were as follows:
Out of all 193 respondents interviewed, 51 respondents which are equal to (26.6
percent) agreed that the benefits are satisfying. Thirty eight (38) respondents which
are equal to (19.75 percent) were neutral and the remaining large number of the
respondents (104) which is equal to (53.9 percent) disagreed with the benefits being
satisfying. During data analysis, the researcher realized that the pattern of the
answers reflected the amount contributed monthly from the salary. In this it was
realized that, majority of those who disagreed with the amount given as a benefit
were low income earners while those who said the benefits are satisfying were high
income earners. Figure 4.4 shows the findings below:-
43
Figure 4.4: Showing Respondents answer on the satisfaction of social security
benefits.
26.60%
Agreed
53.90%
19.75%
Neutral
Disagreed
Source: Field data (2013)
4.2.3 Informed participation of social security members
In this the researcher was interested to see if the beneficiaries had enough
information to attract them to join Social Security Schemes. This is because it is
argued that, if the members are well informed on why they should be covered, what
are the conditions for entitlement, the benefits offered and other facts, they will
eventually enroll themselves in large number into these schemes. But if the members
do not have sufficient information they will develop negative attitude towards the
scheme.
In order to understand about the informed participation, the researcher asked the
respondents to explain whether there is enough information concerning the schemes
to the contributors and non-contributors in general about the three researched
institution and the different types of schemes they offer. The reason to study this was
to establish how many respondents know about the types of benefits offered in each
institution, the importance of these schemes and to understand if enrollment is
44
increasing and withdrawal of members is decreasing. In this, the results were as
follows:
Out of 193 respondents, 98 (50.8 percent) respondents answered there is importance
of these schemes, 56 (29 percent) answered there is less importance (meaning
presence or absence of the scheme will not affect anything). The remaining 39 (20.2
percent) replied these schemes have no importance.
4.2.4 Compliance rate of contributing members
The researcher was interested in seeing whether the beneficiaries and their
companies comply each month through providing the amount that is needed as
monthly contributions by the Social Security Institutions.
To obtain this data,
compliance levels for the employers and members registered under social security
schemes was collected and analyzed to see whether they demonstrate high or low
degree of compliance. It was discovered that in terms of the compliance, each of the
institution has its own way of approaching those who are evading contributions. For
example, in case of PSPF, they made follow up quarterly hence four times annually
to identify evaders and then send them warning letters to inquire about their
contributions. From there, they are given fixed time to bring their contributions, if
failed they will be penalized. NSSF has operation team working office to office
performing enrollment of new customers and checking if old customers have
submitted their monthly contributions by confirming through payment receipts. In
case of LAPF, there is no much difference from the other two institutions; they have
a group of workers (department) forming a team responsible for the follow up of
certain regions and customers. They have to follow up, and in case of delays they
fine them. If that fails, they also have provisions of sending them to court of law.
4.2.5 Administration costs of social security institutions
Viability of SSI is a crucial indicator of adequacy of social security benefits offered
by these SSIs. Most actuarial studies suggest that the administrative expenditure of
any SSI must stay within the range of 3-5 percent of contributions received if that
SSI is to remain viable and sustainable. Mesa-Lago (1989) pointed out that the
45
percentage of administrative over total expenditure in the social security system is
very high for Latin America, fluctuating from seven percent in Costa Rica, Chile and
Uruguay to 10 percent in Peru and 18 percent in Mexico. In this study, the cost
structure of the SSIs covered in this study was extracted from the 2011/2012
financial reports.
Out of the four SSIs covered, it is only LAPF with 4.65 percent of administrative
expenditure on contributions while NSSF takes the lead with the highest percentage
rate at 17.5 percent. The administrative expenditure as a percentage of contributions
received is at 12.1 percent for PSPF. This situation indicates the existing SSIs
consisting of poor cost structures that are likely to affect the payment of long-term
benefits in future and thus distort the meaning of social security benefits.
4.3
To analyze the influence of customer satisfaction on the level of adequacy
of benefit offered
The researcher was interested in understanding the rate at which the customers are
satisfied with the nature of the services given by the Social Security Institutions.
Basically, the aim of surveying about customer satisfaction is to see how many
customers are satisfied with the services and what effect does the customer case
service has on the members enrollment and withdrawal to the schemes. The reason
for assessing this is that some authors argue poor customer service can result into
some members not being satisfied with the benefits given. The situation may be due
to several factors such as delay in payment of the benefits due to poor customer
services also the use of harsh languages by customer care when inquiring about their
benefits problems. The researcher asked the respondents if they are satisfied with the
customer service in the institutions. The results were as follows:
Out of 193 respondents, 25 (13 percent) respondents agreed that they are satisfied
with the services, 87(45.1 percent) respondents mentioned that they are not satisfied
with the services and the remaining 81 (42 percent) argued that they do not know
anything about the services. The reason for this high percent of the respondents not
being satisfied with the service is due to several reasons including: Long time of
46
processing their benefits; standing in long queue for long time, few customer care
services centers located in regions and very few offices in districts; and lastly
benefits review neglects some of the pensioners particularly those who are low
income earners where they take long period of time to increase their benefit rate.
From there, it is reasonable to argue that high percent of respondents are not satisfied
with the services given by the institutions hence there is a need to increase trainings
or other incentives to workers so as to promote their working skills. Also, there is a
need to increase human resources to attend the members and customer care centers
should be placed at least in every district so as to avoid long queue in towns and
enhance accessibility of the social security services
4.4
To determine the influence of internal competence of institution workers
on the quality of service offered
In this section, the main aim was to assess the level of competence of the workers
through checking their competence in terms of experience, education level, and
trainings that they have received throughout time to help them improve their service
provision techniques. The main aim of assessing this is that, with right level of
education and trainings plus right experience, it is very clear that the service
provided by a person with high level of both three factors will be high. To explain
this, the researcher studied both factors separately. Below is the result of each factor
as responded by the respondents.
4.4.1 Training
Training forms an important component in capacity building. People with high
frequency in terms number of training attended usually contain some important
information that enables them to perform certain activities better than those who
have not attended. Like any other business enterprise, capacity building to individual
staffs in social security industry is a key determinant of quality services in the
industry and so are the benefit offered.
The result from the study shows that most of the social security workers attend
training as indicated by 83.6 percent of the interviewed social security experts. These
47
results should supposedly reflect high quality services from Social Security
Institutions and so are the benefit offered.
Apart from that, the researcher was also interested to see if there is any form of
training offered in the institutions, the main focus was to see if the institution puts
some focuses on improving employees working capacity so as to enhance the nature
of service offered by the institution. Concerning existence of training programs at the
Institution, the research conducted a quick survey in order to obtain general
awareness of staff on existence of such trainings. In this case, the respondents were
asked to state if they were aware of the design of the training and development policy
at the institutions. About 74.4 percent of the staff members who responded to the
question said ‘yes’ and 25.6 percent said ‘no’.
This data reflected what was also again mentioned in their Annual Reports which
showed that the institutions recognized the importance of training and hence it
continued encouraging and sponsoring its employees to attend various training
courses locally and internationally. The conducted trainings include Benefit
seminars, inspector seminars and customer care and procurement courses. In case of
NSSF, a total of 63 employees benefited from internal courses i.e. advanced driving
courses, records management, accountant and auditor conferences, secretarial
courses, report writing and presentation skills and other 12 employees have benefited
from different external courses.
Furthermore, NSSF sponsored 3 employees to
undertake different courses while one staff was provided with education loan. Seven
employees were given permission to undertake part time studies under private
sponsorship. The table below contains list of staffs on studies/training since 2008/92012. In case of LAPF, 42 have benefited from internal course and three on external
courses, while for the case of PSPF 13 have benefited in internal courses and five on
external courses.
48
Table 4.1: Showing list of staffs on studies/training since 2008/9-2012
Category
2008/9
A:Under Institutions’ sponsorship
1
B:Under private sponsorship
6
C:Under loan facility
3
Total
Source: NSSF Annual report 2011/12
2009/10
1
10
7
2011/12
2
14
7
61
Table 4.2: Showing list of staffs on studies/training since 2008/9-2012
Category
2008/9
2009/10
2011/12
A:Under Institutions’ sponsorship
2
1
1
B:Under private sponsorship
3
8
10
C:Under loan facility
2
3
4
Total
61
Source: PSPF Annual report 2011/12.
Table 4.3: Showing list of staffs on studies/training since 2008/9-2012
Category
2008/9
2009/10
2011/12
A:Under Institutions’ sponsorship
1
1
1
B:Under private sponsorship
5
11
12
C:Under loan facility
1
6
10
Total
61
Source: LAPF Annual report 2011/12
All this indicates that, people working at the Institutions are well equipped with the
knowledge needed for such jobs. Also the institutions’ are well establishment to
make sure the working conditions are improved and are conducive.
49
CHAPTER FIVE
INTERPRETATION OF THE DATA AND DISCUSSION
5.0
Introduction:
The study aimed at analyzing the adequacy of the benefits offered by the Social
Security Institutions in Tanzania. Given the existence of many Social Security
Institutions in Tanzania, it was expected that such situation would create competition
among the Social Security Institutions and eventually provide benefits that reflect the
intended meaning of social security benefits. In this study, the adequacy of social
security benefits was justified through three major ways. These include: the benefit
administration procedure in terms of coverage, adequacy, equity, informed
participation, compliance and administrative costs; Customer satisfaction and;
Quality of services offered.
5.1
Findings from research question one
Research question one: To what level is the existing social security institutions’
administration system delivers adequate social security benefits?
Evaluating the adequacy of any particular social security benefits, it is necessary to
relate such analysis to a general framework for evaluating individual’s general
economic status and the variety of means available to achieve or change the status.
In terms of adequate social security benefits by the institutions, the study aimed at
assessing several things which together form up the adequacy of the social security
services. For this to be realized, issues concerned with coverage, equity, adequacy,
informed participation, compliance, administrative costs needed to be addressed by
any social security institution with due respect. These are explained as follows;5.1.1 Coverage
This basically aimed at understanding the amount of members that the institutions
(NSSF, LAPF and PSPF) cover in the whole country. The reason for this is due to
the principle of social security which the proponents of this theory argues that a
social security system is viable with large number of insured person and the main
focus of every social security system must be to increase its members coverage. The
50
basic reason for emphasizing on the coverage is due to the risk pooling, which can
only be possible with large members, who will be contributing into the system
without much burden.
This is mainly concerned with the number of people on which the social security
institution covers. Coverage is more important in Social Security because, it helps in
solving the problem of risk pooling, that is the larger the number of people involved
in the scheme, the less the contributing burden that the members will be faced with.
In this section, data collected showed that, In Tanzania out of 44,929,002 people and
literacy rate up to total population of 69.4 percent
(2012 census report), only
911,923 which is equal to two Percent of the country population are the ones that are
covered with social security schemes studied. This is basically due to the fact that
benefits in high percent are given to the formal working class only. Hence, there is a
need to device a new means to accommodate other people especially those in
vulnerable groups such as orphans, old age widows etc. that are not in the working
class and not covered with the schemes.
The researcher then was interested in understanding the general distribution of
workers among the three Social Security Institutions that are covered in this study.
The result was as follows; out of 45,000,000 people, 501,200 are covered with
NSSF, 300, 578 PSPF and 110,145with LAPF all summed to 911,923 people
covered by the three studied SSIs. The data collected from the research has identified
that it is only a few people who are covered with these schemes. Out of all 45 million
people, only 911, 923 (two percent) are the ones covered by these schemes, hence
there is a need to improve this coverage because it is too small. Also, it was
highlighted that this high percent is taken by those employed in government sector,
while those employed in private sector only few of them are enrolled into these
schemes. Most of these schemes cover the formal sectors in larger extent than the
informal sector like agriculture, fishing and trade. This is supported by various
studies such as Bossert (1987), (Tungaraza), 1988 and Tibendage (1999) who all of
them also confirm the coverage of these institutions in Tanzania is small compared to
51
the number of people that are in need of these services. Furthermore, Issa (1980)
indicates problems associated with social security coverage for workers in rural areas
of developing countries. Such problems include registration, compliance, recordkeeping, estimating wages or income in agricultural setting, delivering benefits etc.
Furthermore, similar problems arise when trying to cover workers in the “informal
sectors” of the economy (ILO, 1985). The situation in many developing countries
may be characterized as growing frustration in the face of an inability to move
forward more rapidly to provide social protection to a greater proportion of the
country’s population. The coverage question has been an issue of concern in most
countries for decades and a topic of frequent discussions at social security meetings
(Alfredo, 1980)
5.1.2 Adequacy and Equity
Coming to adequacy and equity of social security benefits, the researcher was
interested to see how the benefits given by the social security Institutions are
considerate to its members. Vitas and Skully (1991) suggest that in countries with
high inflation and unindexed benefit formulas or pension payments, the real value of
benefits have been eroded by inflation. This caused a capricious redistribution of
benefits from workers with long service and high incomes to those with short service
and high incomes to those with short service with low incomes. Since the primary
objective of social security benefit is to compensate the loss of income due to social
or economic distress it is therefore imperative to analyze adequacy issue with the
amount paid to beneficiaries. Particular reference will be made to amount the pension
paid to pensioners from the social security institutions covered in this study. Out of
all 193 respondents interviewed, 51 respondents (26.6 percent) agreed that the
benefits are satisfying. 38 respondents (19.75 percent) were neutral and the
remaining large number of the respondents,104 (53.9 percent) disagreed with the
benefits being satisfying. According to the study done by Isiaka (2011) Social
security benefits may be considered adequate if:
•
They help to achieve expected social policy outcomes (e.g. meeting the needs
of people who have to cope with life’s essential risks).
52
•
The relationship between benefit levels and taxes and/or contributions paid
during a working life is considered to be “fair” (social adequacy);
•
They work in synergy with employment instruments and fiscal and other
economic policies, and do not result in unwanted economic consequences
(economic adequacy).
•
Should be sustainable and robust enough to withstand shocks. It must offer
beneficiaries security of adequacy even during periods of economic and
financial fluctuations.
All these are not well covered by SSIs in Tanzania. This means the adequacy of
social security benefits is still uncertain.
Both evidences from this research and literatures show that there are problems with
the benefits given hence the beneficiaries are not satisfied with these benefits. A
particular important item to note here is that, despite having review between threw
years up to five years, some of the beneficiaries have to wait for more than those
three years so as to see their benefits change even after they are in economic distress.
Vittas and Skully (1991) reported that the amount of “unintentional redistribution”
that occurs in a plan. “Unintentional redistribution may” result from the effects of
inflation on the distribution of benefits within and across generations, but it may also
be caused by changes over time in the provisions or performance of different
schemes. For the purpose of this research, particular reference was made on how
frequent and at what interval in of period of time social security benefits are being
adjusted to get rid of the ill effects of inflation. Economic statistics reveal that the
general price level is ever changing regardless of the proposition of change. The
Bank of Tanzania Monetary Policy Statement for the year 2004/2005 reported the
inflation rate of 6.5 percent as of April 2004. This indicates the importance of social
security benefits adjustments. Accordingly, it is expected that social security benefits
and pensions in particular get adjusted to reflect the real income for pensioners. For
pensions that have not been adjusted for more than a year certainly they do not
portray the intended meaning of social security benefit.
53
Therefore; there must be an established mechanism which will look at the means of
reviewing these benefits and the interval should be reduced up to two years due to
current economic fluctuations which in three years the rate might be very different
from the original amount which was proposed by the institutions.
Equity denotes fairness or social justice. It implies that people's needs, rather than
social privileges, should guide the distribution of opportunities for well-being. Equity
requires reducing unfair disparities as well as meeting acceptable standards for
everyone. Pursuing equity in social security means trying to reduce unfair and
unnecessary gaps in social security, while working efficiently to achieve the greatest
improvements for all. The researcher found that there are great disparities in both
formal and informal sectors in the social security issues, for instance, most of the
respondents in formal sector were complaining of the great difference in the pension
paid to retirees; some are paid a large of money monthly and other very little. This
has been evidenced in the informal sector too where there is a great inequality in the
distribution of resources. Studies on equity issues in Tanzania include the works by
Awiti (1973), Putterman (1986), Bank of Tanzania (1981) and Tungaraza (1988).
When examining the distribution of land in Ismani, Iringa Region Awiti (1973)
concluded that rich peasants, representing about nine percent of households, held
approximately 53 percent of the total land under cultivation. A similar study by
Putterman (1986) in some selected villages in Arusha, Morogoro, Mbeya, Iringa and
Ruvuma regions reaffirmed the existence of inequality in the distribution of
landholding.
5.1.3 Informed Participation
The researcher was also interested to see if the beneficiaries had enough information
to attract them to join Social Security Schemes. If the members are well informed on
why they should be covered, on the conditions for entitlement, on the benefits
offered and other facts, they will eventually enroll themselves in large number into
these schemes. But if members do not have sufficient information they will develop
negative attitude towards the scheme. The result showed that 98 (50.8 percent)
respondents said there is importance, 56 (29 percent) responded that there is less
54
importance (meaning presence or absence of the scheme will not affect anything).
The remaining 39 (20.2 percent) stated that these schemes have no importance. In
Tanzania, most members of social security schemes are not well informed of the
Laws and Regulations governing the schemes for which they belong. The fact that
for an insured person to qualify for say a pension must contribute credits (15 years)
is not clearly understood to most people (Tungaraza, 2009). Hence, there is a need to
provide more information so as to reduce number of people who thinks there is no
importance of these schemes. Also, those with limited information need to be more
educated so as to change their attitudes. If these actions are in place, there is a big
possibility that the number of people enrolled in these schemes will increase over
time.
5.1.4 Compliance
One of the major issues of administration is non compliance by contributors in the
payment of contributions and the need for an adequate enforcement structure to deal
with the situation. The researcher realized that each of the three institutions has their
own mechanism designed specifically to track the evaders. Such mechanisms include
checking and assessing their documents to invaders, and then from there necessary
measures such as penalties and court session follow up for those chronic evaders.
However, these SSIs are faced with a non-compliance situation, especially NSSF that
deals mostly with private sectors employers. Studies conducted by Schulz (1993)
explain that substantial policing is often required to ensure compliance among
employers. Even where there is compliance, the payment may be deliberately
delayed, especially in situations where interest rates and/or inflation are high. In
some countries, non compliance is generally ignored; in others the penalties are not
significant enough to encourage speedy compliance. In Tanzania social security
schemes, particularly those covering the private sector have experienced low levels
of compliance for most of the time since they were established. Compliance is
determined by the ratio of number of registered employers to the number of those
complying (those paying contribution). The ideal situation should indicate a 100
percent compliance level indicating that all employers comply. But, in practical
compliance level have been low in fact very low to some schemes where the level is
55
below 50 percent. For the purpose of this resurface, compliance level that reflect the
adequacy of social security benefit is set at 80 percent , short of that such institution
must have problems in payment of benefits as 20 percent of employers do not pay
contribution so how is the scheme going to pay benefits to members from those
employers. Establishing legislations of the current social security institutions have
provisions that conflict in terms of operations (URT, 2003:9).
5.1.5 Cost of Administration
There has been concern raised in international circles with regard to the relatively
high administrative costs of social security organizations in various countries. While
it is difficult to compare large and small countries with wide range of different
programmes, those experts who have looked at the available data conclude that the
serious administrative inefficiencies in some countries are driving up costs and
absorbing an excessive amount of incoming revenues. In term of administration cost
this study realized that, out of the four SSIs covered, only LAPF with 4.65 percent of
administrative expenditure on contributions while NSSF takes the lead with the
highest percentage rate at 17.5 percent. The administrative expenditure as a
percentage of contributions received is at 12.1 percent by PSPF. This situation
indicates the existing SSIs consisting of poor cost structures that are likely to affect
the payment of long-term benefits in future and thus distort the meaning of social
security benefits. Mesa-Lago (1989) argues that the percentage of administrative
over total expenditure in the system is very high for Latin America, fluctuating from
seven percent in Costa Rica, Chile and Uruguay to 10 percent in Peru and 18 percent
in Mexico, percentage for above those in the developed countries. The majority of
administrative expenditures relate to the remuneration of personnel, which is
excessive in all of the countries. From actuarial view, it is recommended a feasible
social security scheme have the administrative costs that lie between three and five
percent of contribution income. From this actuarial recommendation it is expected
that feasibility of social security scheme and the adequacy of the benefit offered by
that particular scheme must move in the same direction. Accordingly, any social
security scheme with administrative costs above the recommended rate shall reflect
poor security benefits offered by that particular scheme.
56
5.2
Findings from research question two
Research question two: Are the social security members satisfied with the service
offered by the social security institutions and thus the adequacy of benefits offered?
From there the researcher was interested in seeing if social security members are
satisfied with the service offered by the social security institutions and thus the
adequacy of benefits offered. Basically, the researcher wanted to see what type of
information is given by the customer care centers, also to see if the members are
satisfied with the treatment they receive from institution staffs. In this, the results
were as follow.
Out of 193 respondents, 25 (13 percent) respondents agreed they are satisfied with
the services, 87(45.1 percent) respondents mentioned that they are not satisfied with
the services and the remaining 81 (42 percent) argued that they do not know anything
about the services. The reason for this high percent of the respondents not being
satisfied with the service is due to several reasons including: Long time of processing
their benefits; standing in long queue for long time, few customer care services
centers located in regions and very few offices in districts; and lastly benefits review
neglects some of the pensioners particularly those who are low income earners where
they take long period of time to increase their benefit rate. Social security means the
protection which society provides for its members through a series of public
measures against the economic and social distress that otherwise would be caused by
the stoppage or substantial reduction earnings resulting from sickness, maternity,
employment injury, invalidity, old age and death; the provision of medical care; and
the provision of subsidies for families with children (ILO 1984 cited in URT: 2003).
If large number of persons is not satisfied with the benefits provided by these SSIs
then they are not protected. Also in Maslow's hierarchy of needs which was proposed
by Abraham Maslow in his 1943 paper, A Theory of Human Motivation. One of the
needs mentioned is Safety needs; person’s needs for stable environment relatively
free from threats, meaning that needs for security and protection from physical and
emotional harm, as well as assurance that physical needs will continue to be
met(Cole, 2004:35). This is the feeling of being protected from external risks which
57
may be through the SSIs schemes and services provided to the members. Since the
results from this study shows that most of the respondents are not satisfied with the
services provided then the benefits provided are not adequate.
5.3
Findings from research question three
Research question three: To what level are the internal competence of the Social
security institutions influence the quality of service offered and thus the adequacy of
benefit offered?
Contemporary social security administration requires highly skilled management
team. A well trained and skilled management team is the key factor in determining
the adequacy of social security benefits through the perceived quality service and
customer satisfaction. Customers judge quality relatively to what they want. They
view a firm’s service quality by comparing their perceptions of service experience
with their perception of what the service performance should be. A service quality
gap result when service perception falls short of expectation. Defining quality in this
way is more discriminating than in the traditional concept of satisfaction. It is also
more consistent with quality principles and demonstrates high reliability and validity.
It is important therefore that social security institutions arrange for training
programmes to their employees that will equip them with necessary skills and enable
them accomplish their mission in the social security industry.
The aim of this research was to see if the institution employees have the needed skills
and quality education that is needed to perform their duties well, also to see if this
has any adverse effects on the number of members that are enrolled in the schemes.
In case of NSSF, a total of 63 employees benefited from internal courses i.e.
advanced driving courses, records management, accountant and auditor conferences,
secretarial courses, report writing and presentation skills and other 12 employees
have benefited from different external courses. Furthermore, NSSF sponsored three
employees to undertake different courses while one staff was provided with
education loan. Seven employees were given permission to undertake part time
studies under private sponsorship. In case of LAPF 42 have benefited from internal
58
course and three on external courses, while for the case of PSPF 13 have benefited in
internal courses and five on external courses. It was realized people have good
trainings, what is needed is special training on customer care services to improve
their practice in handling customers. However, the number of the workers who have
received trainings and different kind of educational development do not match with
the number of the members whom they serve. Also, most of these skilled workers are
stationed in regional offices leaving behind most districts offices located in
countryside. That means, these studied SSIs lack a good number of workers. Gruat
(1990) spotted out that one of the main problems in social security organizations is
the scarcity of high-level, trained personnel. The social security schemes set up in the
wake of independence were often grafted on to a general administrative apparatus
which, given the shortage of skilled personnel, assigned the human resources
available primarily to those tasks regarded as priorities for the country’s future such
as building up and operating a central administration. As a result, the administrative
structure of social security funds was very often set up in haste with negative effects
that have tended to perpetuate themselves. Also, the study conducted by Isiaka
(2011) came up with a proposal to ensure that the administration is well equipped by
reinforcement of national capacity from the high level managers to the professionals
in the key administrative and managerial areas and tripartite members of governing
bodies. Parasuraman, et al (1985) also developed a unique model of service quality.
According to this model, the quality of the services as perceived by the customer is
the result of comparison between the real lives experiences of the service delivered.
When experience exceeds expectations, the quality is high, and when experience
does not reach the level of expectations the perceived quality is low. This study
results most of the members of the studied SSIs experience does not reach the level
of expectation. That is in most cases members are not getting what they do expect.
Therefore the results from this research supported by other literatures suggest that
there is still a lack of well competent and trained workers in these SSIs to provide a
quality and satisfying services to the members/customers.
Generally, the results from the study indicate that the Social Security Institutions are
characterized by lots of inefficiencies. In terms of benefits administration, there is a
59
very low coverage, inadequate benefits which are not indexed to get rid of the ill
effects of inflation, poor involvement of members in decision making, low levels of
compliance and high administrative costs in relation to contributions income.
Furthermore, customer satisfaction cannot even be predicted as a result of poor
quality services. Consequently, one would conclude that the Social Security
Institutions in Tanzania do not provide the benefits that have required meaning to the
members.
Other challenges mentioned by the respondents are such as formal social security
schemes to cover very few benefits are inadequate. The services are characterized by
delays in making payments to members, bureaucracy, inefficiency, and poor
governance, they are usually monopolistic and workers are forced by law to join,
with no choice between schemes, they are inflexible and do not provide a forum for
members to have a say in the way their contributions are invested, there is no
possibility of portability of portability of members benefit from one scheme to
another, there is no system and comprehensive national social security policy which
governs all social security programs as activities in the country and Social protection
is still regarded not as a right of all citizens but as privilege.
60
CHAPTER SIX
SUMMARY, CONCLUSION AND RECOMMENDATIONS
6.0
Introduction
This chapter gives out a conclusion and recommendations of the study.
The
conclusions are based on the findings of each chapter, while the recommendations
are the actions to be taken to improve the role of the NSSF, LAPF and PSPF.
6.1
Summary-
This study aimed at analyzing the adequacy of the benefits offered by Social Security
Schemes in Tanzania. Given the existence of many SSIs in Tanzania, it was expected
that such situation would create competition among the SSIs and eventually provide
adequate benefits that reflect intended meaning of social security benefit. Also the
study would add to the scarce empirical literature on social security benefits; would
inform policy makers on having a common policy, to be followed by social security
institutions in Tanzania; would also pose a challenge for the social security
institutions to improve their benefits; and would improve adequacy of their benefits
offered by social security institutions in Tanzania. In doing so, the study had several
specific objectives. These objectives were as follows: i) to analyze the benefits
administration in terms of coverage, adequacy, equity, informed participation,
compliance, administrative costs and actuarial soundness. ii) to analyze the influence
of customer satisfaction on the level of adequacy of benefit offered. iii) to determine
the influence of internal competence of institution workers on the quality of service
offered. In order to effectively achieve these objectives, the study utilized several
research questions. These research questions were as follows: a) Is the existing
benefits administration system deliver adequate social security benefits? b) Are the
social security members satisfied with the service offered by the social security
institutions and thus the adequacy of benefits offered? c) Are the internal
competences of the Social security institutions influence the quality of service
offered and thus the adequacy of benefit offered?. The researcher utilized both
interviews and questionnaires to correct the research data. It was realized that, in
general there are problems in SSIs in Tanzania which needs immediate attention so
as to rescue the situation. This research finding shows that the adequacy of benefits
61
offered by these SSIs in Tanzania are inadequate in terms of the quality, coverage,
internal competence of the SSIs administrator and also on compliance. All studied
social security institution provides benefits to its own members however the
conclusion from the research shows that there is much to be done by the government
and these SSIs to have adequate benefits provided to its members.
6.2
Conclusion
It is clear from the discussion that conventional social security systems do not reach
the majority of the poor. This is mainly due to the design of conventional social
security schemes which makes them to respond only to the needs of persons
employed in the formal sector.
However; Social Security Institutions have been increasingly acknowledged as
significant tools for provision of retirement packages to people that have been
enrolled in majority of their schemes. Although one can argue that there are many
challenges that are currently facing the institution, still the institution has developed
several means in trying to alleviate these problems. The performance of the
institution can be rated as high, meaning that, the institution is managing to achieve
large percent of its objective despite of still facing problems.
Achieving adequate benefits to people is a challenging objective due to various
problems that are coming in hand during the course of implementing these
objectives. Although the Social Security Institutions are faced with many challenges
especially in achieving meaningful services, the institution deserved some credit
from the way it has been performing this activity with easy and accuracy. Many
existing challenges can be argued to come from lack of enough funds and poor
systems to handle these schemes. Interviews with the respondents indicated that,
there is a need to create a mechanism that will be performing the action of
crosschecking the rate offered as benefits against the actual costs of living. Lack of
cross checking with the actual cost of life, it affects the exact meaning of the amount
given as a benefits to members. Interview with many workers from different
companies seems to point a number of weaknesses in the institution which include
62
both in terms of benefits and the general services that are offered with the
institutions, for instance most of them complained on the termination of short time
benefits upon retirement. This shows that majority of them are unsatisfied with the
way their benefits are paid and handled by the institution, hence there is a need to
improve both the packages and services offered. And lastly covariance risks like
HIV/AIDS, famine, Civil wars are not covered by these schemes yet.
But the main problem is inside the institution itself. In the institution, returns from
these benefits are very small and take long period of time to reach the beneficiary,
this indicates a failure in the mechanism used by the institution in paying up their
benefits, if they have an improved way of doing so probably this percent can be
lowered up. If they have managed to correct the contributions on time, it is better to
organize them in a way that also can ensure the payment of the benefit also in time,
and the service are of improve quality. This will in turn change the perception of the
people concerning the Institutions benefits into meaningful rather than the current
perception which believes the benefits are not meaningful but troubles. Despite all
this, the institutions are performing a good job in provision of benefits to its
members, from the research objective which was mainly to assess the mean fullness
of the benefits that are given but the threes Social Security Institutions, and in that,
the institutions can be graded as high performer, although those pointed challenges
needs to be corrected.
6.3
Recommendations

Government top up to boost the low benefit earners, through the study the
researcher discovered that the low income earners are the one receiving low
pensions in general compared to high income earners. This is because the
contribution to the schemes is according to persons’ income per month. The
government should look in to this and provide assistance to the low income
earners to boost up their benefits from these SSIs which will in turn cushion
them from social, economic, health and psychological contingencies.
63

There is a need for the Social Security Institutions in Tanzania to increase
their membership size by extending their coverage into the informal sector
where there is large segment of working population. This would increase
their contribution incomes and thus improve their ability to provide adequate
benefits to their members. However, this would only be possible with the
government introducing a law, that will require people working in the
informal sector to register with Social Security Institution

The government should enforce the law on statutory minimum wages so that
the private sector is not paying wages below statutory minimum wages. This
is important because the salary one receives at the retirement age, determines
the amount of monthly pension one is going to receive, thus the higher the
salary, the higher the pension.

The Social Security Institutions should undertake indexation of benefits on
annual basis so that the ill effects of inflation can be removed. When benefits
are indexed, the purchasing power of members who receive these benefits as
a compensation of loss of income would improve and thus meet the intended
objective.

There is a need for the Social Security Institutions to involve members in
decision making process through their institutional framework say the Board
of Trustees.

There is a need to enforce the laws, establishing the Social Security
Institutions in Tanzania so that registered employers and members will be
heavily penalized if they fail to submit contributions into schemes they are
registered. This will improve compliance levels and enable Social Security
Institutions to increase their contribution incomes that will eventually finance
the benefits offered.
64

The Social Security Institutions in Tanzania must improve their financial and
administrative policies or even to replace them altogether. This should be
done with a focus of reducing administrative costs.

There is a need for Social Security Institutions in Tanzania to make use of
state of art technology by computerizing their operations. If this is
implemented there shall be huge reduction in paper work and thus efficiency
and quality of services will be improved and eventually the administrative
costs will go down.

And the social security institution should change their review policy to be in a
short interval, for instance two years so as to keep in pace the continuous
social, economic and political changes that affect security of the people.
6.4
Areas for further research

This study was conducted in the three SSIs in Tanzania that is NSSF, PSPF and
LAPF, while in Tanzania there are seven social security institutions. Therefore more
research may be done to the other remaining social security institutions in Tanzania
namely PPF,GEPF,NHIF and ZSSF.

In terms of coverage this research was conducted in Ilala and Kinondoni Districts
branches only, Dar es Salaam Region where the data could be obtained easily and in
short time. It is hereby recommended that, further studies should be conducted in
other branches of the three researched SSIs in this study which are in Dar es Salaam
Districts or other areas in Tanzania to confirm the finding.

And more studies can be done by incorporating different groups of people with
different socio-economic and political aspects to have a wide ground for more
comments and answers.
65
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69
QUESTIONAIRE
APPENDIX I
MZUMBE UNIVERSITY
DAR ES SALAAM BUSSINESS COLLEGE
A QUESTIONNAIRE FOR SOCIAL SECURITY EXPERTS-CHEK LIST
A student from Mzumbe University is studying adequacy benefits offered by social
security institution in Tanzania. The objective of this questionnaire is to obtain
relevant information from the social security experts focusing on the social security
benefits offered customer satisfaction and the perceived quality service and use this
information to analyze the adequacy of benefits offered by the social security
institutions in Tanzania. Please respond to the questions below by giving your true
level of feeling. The information you are going to provide will be used for academic
purpose only and treated with confidence. Thank you for your cooperation and
valuable time.
1. Name of the social security institution………………………………………
2. How long have you been in the field of social security operations?
1) Less than two years
2) Two years
3) Four years
4) More than four years
3. Have you attended any social security training?
a) Yes
b) No
[
]
[
]
4. If yes in 3, what was the theme of training you attended?
1) Customer care
2) Benefits administration
3) Social security financing
4) Other, specify; ………………………
5. What is the frequency of training in the institution?
a. Once a year
b. Once in two years
70
c. Twice a year
d. Other specify……………………………………….
6. How many benefits are being offered by your institution?
1) One benefit
2) Two benefits
3) Three benefits
4) More than four benefits
7. Why do you offer these types of benefits in your institution? ....................
…………………………………………………………………………………
…………………………………………………………………………………
8. Can a member in your institution enjoy more than one benefit in his/her
lifetime?
a) Yes
b) No
[
]
9. Do you think the amount of benefits offered by your institution satisfy your
customer’s expectations? Explain ……………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
How frequent do you revise your benefits?
a) Unknown
b) Annually
c) After two years
d) After every five years
10. What do you do to the contributions of your members when they decide to
change employer who contributes to another social security institution?
………………………………………………………………………………
………………………………………………………………………………
………………………………………………………………………………
11. Where do your customers services located ……………………………………
…………………………………………………………………………………
12. How many Customer care centers do you have so far?
71
……………
13. What changes or ideas do you have in the current situation of social security
institution I Tanzania? Especially on portability of benefits, amount of
pension offered, coverage of social security institution to the population of
the Tanzania ………………..................
Appendix 3
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
Please explain what (social security institution) should do to improve the
quality of its services? ………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
What is the maximum and the minimum amount provided in each scheme?
e.g Pension…………………………..
………………………………………
……………………………………….
………………………………………
………………………………………..
14. What is the rate of enrollment and withdraw from the institution from year
2007 to 2013?
Enrollment number…………………………………………….
What is the degree of response from the employers towards the submission of
employees’
contribution?
Provide
statistics
2013……………………………………….
Thank you, for your cooperation.
72
from
2010
to
APPENDIX II
MZUMBE UNIVERSITY
DAR ES SALAAM BUSSINESS COLLEGE
A QUESTIONNAIRE FOR SOCIAL SECURITY BENEFICIARIES
A student from Mzumbe University is studying adequacy benefits offered by social
security institution in Tanzania. The objective of this questionnaire is to obtain
relevant information from the beneficiaries focusing on the social security benefits
offered customer satisfaction and the perceived quality service and use this
information to analyze the adequacy of benefits offered by the social security
institutions in Tanzania. Please respond to the questions below by giving your true
level of feeling. The information you are going to provide will be used for academic
purpose only and treated with confidence. Thank you for your cooperation and
valuable time.
1. Name of the social security institution………………………………………
2. Gender : (a) Male
(b) Female
3. Age
[
]
[
]
[
]
4. Type of benefit;
a. Old age pension
b. Invalidity pension
c. Survivors pension
5. Have you ever enjoyed a short-term benefit during your employment?
a) Yes
b) No
[
]
6. What was the amount of last monthly salary in Tshs? Before your retirement?
a) Below
50,000
b) 50,000 - 100,000
c) 100,000 - 150,000
d) 150,000 - 500,000
e) Above
500,000
73
7. How much is your monthly pension?
……………….
8. How long does the amount of pension you receive satisfy your needs?
a) Less than a week
b) A week
c) Two weeks
d) A month
e) More than a month
9. How long have you been receiving the same amount of pension?
a) Less than a year
b) A year
c) Two years
d) Three years
e) Four years
f) More than four years
10. Is there anything about the benefits of the social security institution that
stands out as being superior? Please rank (1 more superior, 5 less superior)
a) Old age
[
]
b) Survival
[
]
c) Invalidity
[
]
d) Health insurance
[
]
e) Employment injury
[
]
f) Withdrawal
[
]
g) Maternity
[
]
h) Education
[
]
i) Loans
[
]
11. Please indicate by writing the number on a box, your level of satisfaction or
dissatisfaction on the following attributes of social security attributes of
social security activities from your current social security institution, where
by:
1 = Very Dissatisfied
2 = Dissatisfied
3 = Neutral
74
4 = Satisfied
5 = Very Satisfied
Attributes
a) Benefit processing time
[
]
b) Responsiveness of customer care services
[
]
c) Benefit variety
[
]
d) Waiting in queue
[
]
e) Availability of assistance
[
]
f) Location of branches
[
]
g) Consistency in benefit payment
[
]
h) Quality of Services
[
]
i) Accessibility to customer care
[
]
j) Problem solving knowledge
[
]
[
]
12. The attitude of the representative was;
1) Not patient
2) Not enthusiastic
3) Didn’t listen carefully
4) Unfriendly
5) Unresponsive
6) Other
7) No improvement needed
13. What would best describe what happened at the time of getting the service?
1) Kept me waiting on hold
2) Had to explain several times
3) Didn’t know how to handle
4) Had to ask others
[
5) Spoke slowly
6) Other
75
]
14. The waiting time for benefit processing was completed after;
a) 7 days – 14 days
b) 14 days – 1 month
c) 1 months – 3 months
d) 3 months – 6 months
e) 6 months – 12 months
f) Over 12 months
Thank you, for your cooperation.
76
APPENDIX III
MZUMBE UNIVERSITY
DAR ES SALAAM BUSSINESS COLLEGE
A QUESTIONNAIRE FOR SOCIAL SECURITY BENEFICIARIES
A student from Mzumbe University is studying adequacy benefits offered by social
security institution in Tanzania. The objective of this questionnaire is to obtain
relevant information from the contributing members focusing on the social security
benefits offered customer satisfaction and the perceived quality service and use this
information to analyze the adequacy of benefits offered by the social security
institutions in Tanzania. Please respond to the questions below by giving your true
level of feeling. The information you are going to provide will be used for academic
purpose only and treated with confidence. Thank you for your cooperation and
valuable time.
Name of the social security institution………………………………………
1. Gender : (a) Male
(b) Female
2. Age
[
]
[
]
3. How long have you been the member of this social security institution (years)
……
4. Have you ever enjoyed the benefits due to ant social disaster while in
employment?
1) Yes
2) No
If yes in 4 answer 5 and 6
5. Did the benefits received really compensate the loss of income you
experienced?
6. Please indicate by witting the number on a box, your level of satisfaction or
dissatisfaction on the following attributes of social security activities from
your current social security institution, whereby;-
77
1 = Very Dissatisfied
2 = Dissatisfied
3 = Neutral
4 = Satisfied
5 = Very Satisfied
Attributes
a) Benefit processing time
b) Responsiveness of customer care services
c) Benefit variety
d) Waiting in queue
e) Availability of assistance
f) Location of branches
g) Consistency in benefit payment
h) Quality of services
i) Accessibility to customer care
j) Problem solving knowledge
7. Have you been the member of any other social security institution?
1) Yes
2) No
If yes in, 7 answers 8
8. What happened to your contribution (please explain)………………………
…………………………………………………………………………………
………………………………………………………………………………….
9. Please indicate by writing the number on a box, your level of satisfaction on
the following attributes of social security activities from your current social
security institution, if it has happened to be there where by;
10. 1 = Very Dissatisfied
11. 2 = Dissatisfied
12. 3 = Neutral
13. 4 = Satisfied
14. 5 = Very Satisfied
78
Attributes
k) Benefit processing time
l) Responsiveness of customer care services
m) Benefit variety
n) Waiting in queue
o) Availability of assistance
p) Location of branches
q) Consistency in benefit payment
r) Quality of services
s) Accessibility to customer care
t) Problem solving knowledge
10. Is there anything about the benefits of social security institution that stands out
as being superior? Please mark 1 – more superior to 5 – less superior.
a) Old age
[
]
b) Survival
[
]
c) Invalidity
[
]
d) Health insurance
[
]
e) Employment injury
[
]
f) Withdrawal
[
]
g) Maternity
[
]
h) Education
[
]
i) Loans
[
]
Thank you, for your cooperation.
79