A Dissertation Submitted to the Mzumbe University Dar es Salaam Campus College in Partial Fulfilment of the Requirement for the Award of the Degree of Masters of Business Administration (MBA – CM) of Mzumbe University
In Tanzania members of existing social security funds such as Parastatal Pension Fund (PPF) and National Social Security Fund (NSSF) had been allowed through withdrawal benefit, to take away their retirement benefits upon termination of contracts, resignation, and dismissal. However the practice is becoming more prevalent as more members opt to withdraw their retirement savings once they quit their jobs. The main objective of this study was to examine factors affecting early withdrawal of retirement benefit on the social security system in Tanzania. Specifically study aims at identifying types of pension schemes used in the social security system in Tanzania; determining strategies adopted by the social security funds to control early withdrawal of retirement benefits; find out factors that influence early withdrawal of retirement benefits; and examining the impacts of early withdrawal of retirement to members, government and social security funds.
The study adopted case study design which dealt with various processes and their interrelationships. It was conducted at the Parastatal Pension Fund (PPF) headquarters and three branches located at Temeke, Ilala and Kinondoni districts in Dar es Salaam region. Data were collected using interviews, questionnaire and documentary survey. From this study, two types of schemes were involved which are traditional and deposit administrative schemes. The findings revealed that, the rate of withdrawal had increased up to 1000 withdrawals per months. A number of reasons for early withdrawal were outlined including income level and age of respondents. Considering the impact of early withdrawal to member, government and social security funds, several strategies were adopted to control early withdrawal. These include provision of education to members and offering short term benefits such as education benefit. This study concludes by recommending some structural and policy changes that could help to build members trust, improve retirement benefits and offer more alternative short term benefits to members. This can help to control early withdrawal of retirement benefits.