Social Security schemes play a major role in the fight against poverty. They are arrangements that ensure society take measures to protect members against economic and social distress occasioned by loss of income or reduced earnings resulting from sickness, maternity, employment, injury, invalidity, old age and loss of breadwinner. However, such institutions have of late been plagued with the problems of lack of sustainability and insufficient funds. This paper examines the major features of the Kenyan social security system with a focus on Pension schemes (i.e. systems that provide financial security for the old) to assess the principle challenges to the financial sustainability. The findings show that there were five basic challenges that were particularly critical in the context of Kenya: inadequate regulatory capacity; imprudent investment, macroeconomic instability; poor corporate governance; inability to extend coverage; and design issues such as choices between DB and DC schemes, funding versus PAYGO principles and public versus private management. The major recommendations proposed to address these issues include reforming and enactment of adequate legal and institutional framework, extension of coverage to include both formal and informal sectors, undertake sound investment projects, improve corporate governance, lower administrative costs by implementing time and cost effective operational systems, institute parametric reforms, reform the PAYGO social security system, institute administrative and design changes to reduce contribution evasion. This will be in addition to the government measures to stabilize the macroeconomic environment.

Bachelor Thesis from the year 2024 in the subject Business economics - Investment and Finance, grade: 1, , course: Department of mathematics and Computer Science, language: English, abstract: Pension funds are integral to ensuring financial security in retirement and fostering economic stability. In Kenya, the sustainability of these funds is crucial for supporting aging populations and facilitating long-term investment. This research project undertakes a comprehensive assessment of the financial sustainability of pension funds in Kenya, examining key factors influencing their viability and effectiveness. The study evaluates the current financial status of pension funds, analyzing asset-liability dynamics, investment strategies, and regulatory frameworks. It also investigates demographic trends. The study employs actuarial techniques and methodologies to analyze data, model future scenarios, and evaluate the risks and opportunities facing pension funds in Kenya. By examining demographic trends, inflation rates, Investment portfolio and regulatory requirements, the research aims to provide insights into the factors influencing the financial sustainability of pension funds. The findings highlight the importance of enhancing regulatory oversight, optimizing investment strategies, and addressing demographic shifts to ensure the long-term sustainability of pension funds in Kenya. The research concludes with actionable recommendations aimed at strengthening the pension system and supporting the financial well-being of retirees and the broader economy. Ultimately, this research contributes valuable insights to policymakers, regulators, and pension fund stakeholders, guiding efforts to enhance the resilience and effectiveness of Kenya's pension system in the face of evolving demographic and economic challenges.

The sustained generation of sufficient funds to cater for pension benefits and other social security needs of retirees remains the principal challenge to the financial viability of social security schemes in most countries today. This has particularly been exacerbated by the sharp increase in the aging population requiring social security support relative to the ratio of those workers contributing to the pension fund. It has lead to the deterioration of the financial position of public retirement programs and thus putting the social security schemes under severe pressure and creating uncertainty on their future. Literature reviewed on financial sustainability of social security schemes indicates that in both developed countries and emerging market economies (EME), the financial challenges facing social security schemes are mainly due to inadequate regulatory capacity, imprudent investment, poor corporate governance and macroeconomic instability. In addition high overheads and administrative costs, limited coverage and design oversights particularly the structuring of the schemes either as pay as you go (PAYG), funded, defined contribution or defined benefit systems. Studies in this area have however, not weighed and ranked these factors on the basis of their significance to financial sustainability of the respective social security schemes they examined.Analysis undertaken in this paper shows that troubled social security schemes require a combination of measures to address the issues that undermine their financial position and sustainability. This include initiating parametric reforms, introduction of a multi-pillar pension system, implementation of good corporate governance and investment practices, reforming the regulatory and institutional framework and instituting various pension and economic reforms among others. It is important to note that nearly all studies on social security issues were carried out in developed countries. The paper nevertheless, shows that minimal research has been undertaken in this field in most developing countries. Research in this critical area of finance will therefore help expand the knowledge base in the field, especially in African countries and provide a basis for comparison with work done in other countries in addition to contributing to improved policy formulation and management.

Ghana National Health Insurance Scheme (NHIS) was established in 2003 as a major vehicle to achieve the country’s commitment of Universal Health Coverage. The government has earmarked value-added tax to finance NHIS in addition to deduction from Social Security Trust (SSNIT) and premium payment. However, the scheme has been running under deficit since 2009 due to expansion of coverage, increase in service use, and surge in expenditure. Consequently, Ghana National Health Insurance Authority (NHIA) had to reduce investment fund, borrow loans and delay claims reimbursement to providers in order to fill the gap. This study aimed to provide policy recommendations on how to improve efficiency and financial sustainability of NHIS based on health sector expenditure and NHIS claims expenditure review. The analysis started with an overall health sector expenditure review, zoomed into NHIS claims expenditure in Volta region as a miniature for the scheme, and followed by identifictation of factors affecting level and efficiency of expenditure. This study is the first attempt to undertake systematic in-depth analysis of NHIS claims expenditure. Based on the study findings, it is recommended that NHIS establish a stronger expenditure control system in place for long-term sustainability. The majority of NHIS claims expenditure is for outpatient consultations, district hospitals and above, certain member groups (e.g., informal group, members with more than five visits in a year). These distribution patterns are closely related to NHIS design features that encourages expenditure surge. For example, year-round open registration boosted adverse selection during enrollment, essentially fee-for-service provider mechanisms incentivized oversupply but not better quality and cost-effectiveness, and zero patient cost-sharing by patients reduced prudence in seeking care and caused overuse. Moreover, NHIA is not equipped to control expenditure or monitor effect of cost-containment policies. The claims processing system is mostly manual and does not collect information on service delivery and results. No mechanisms exist to monitor and correct providers’ abonormal behaviors, as well as engage NHIS members for and engaging members for information verification, case management and prevention.

The health systems we enjoy today, and expected medical advances in the future, will be difficult to finance from public resources without major reforms. Public health spending in OECD countries has grown rapidly over most of the last half century. These spending increases have contributed to ...

Chile’s pension system came under close scrutiny in recent years. This paper takes stock of the adequacy of the system and highlights its challenges. Chile’s defined contribution system was quite influential when introduced, and was taken as an example by other countries. However, it is now delivering low replacement rates relative to OECD peers, as its parameters did not adapt over time to changing demographics and global returns, while informality persists in the labor market. In the absence of reforms, the system’s inability to deliver adequate outcomes for a large share of participants will continue to magnify, as demographic trends and low global interest rates will continue to reduce replacement rates. In addition, recent legislation allowing for pension savings withdrawals to counter the effects from the COVID-19 pandemic, is projected to further reduce replacement rates and increase fiscal costs. A substantial improvement in replacement rates is feasible, via a reform that raises contribution rates and the retirement age, coupled with policies that increases workers’ contribution density.

Specialist groups have often advised health ministers and other decision makers in developing countries on the use of social health insurance (SHI) as a way of mobilizing revenue for health, reforming health sector performance, and providing universal coverage. This book reviews the specific design and implementation challenges facing SHI in low- and middle-income countries and presents case studies on Ghana, Kenya, Philippines, Colombia, and Thailand.