Private Organization Employees’ Pension Fund Administration in Ethiopia: Current Challenges and Possible Reforms in Light of the Private Pension Proclamation, No 715/2011
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Date
2020-05
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AAU
Abstract
Societies at all levels recognize the importance of establishing systems which will ensure loss of
income in a situation when unforeseen circumstances happen such as incapacity, old age,
unemployment and the death of an employed person. In order to tackle such challenges, new
comprehensive and workable social security system is necessary. So countries of the globe have
developed different types of social security system according to their factual situations but pension is
the main one. Formerly the administration and regulation of pension is controlled by governments
alone. However, currently countries are reforming their monopolistic management of the pension fund
and shifting the responsibility to the private sector by retaining only the regulatory role. The reasons of
the reform are due to inefficiency, non political neutrality, less national saving, less quality service and
the likes in the state management.
Ethiopia also established its own social security system in 1961 in the public servant sector, since 2011
it established the private organization employees’ social security pension system. Currently both the
public and the private sector pension funds are administered by the government. However, there are
challenges with the administration of the pension fund in private organization employees’ social
security Agency, and complains are arising from stakeholders to this regard.
Thus this research is aimed to show the challenges in relation to the administration of the pension fund
in the private organization employees’ social security Agency. The study used doctrinal and empirical
methods and employed secondary data from books, reports, journals, articles and internet sources as
well as primary data from interviews. Interviews were conducted in government institutions. Different
Ethiopian legislations which have direct relation with the matter were assessed.
In the process, issues like challenges in relation to, the investment of the fund, amount of retirement,
decision on the benefit of the pensioners, in collection of the fund and in the legal provisions are
discussed. Finally possible reforms are indicated that privatizing the pension fund management is
crucial to attain the objectives of the pension. In so doing the structural organization of the private
companies which participate on the sector, investment diversification, instruments for the regulation of
the privatization pension fund investment are indicated.
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Keywords
Pension Fund Administration,Pension Proclamation,Private Organization employees