Issue: 2022/Vol.32/No.3, Pages 92-123
LONG TERM PROJECTION OF THE DEMOGRAPHIC AND FINANCIAL EVOLUTION OF THE PARLIAMENTARY PENSION SCHEME OF UGANDA
Herbert Mukalazi
, Torbjörn Larsson , Juma Kasozi , Fred Mayambala
Cite as: H. Mukalazi, T. Larsson, J. Kasozi, F. Mayambala. Long term projection of the demographic and financial evolution of the parliamentary pension scheme of Uganda. Operations Research and Decisions 2022: 32(3), 92-123. DOI 10.37190/ord220307
Abstract
We study the Parliamentary Pension Scheme of Uganda, a hybrid cash balance scheme which is contributory. It has two categories of members, the staff of the Parliamentary Commission and the Members of Parliament. A long term projection of the scheme’s demographic and financial evolution is done to assess its sustainability and fairness with respect to the two categories of members. The projection of the scheme’s future members is done using non-linear regression. The distribution of future members by age states is done by Markov model using frequencies of state transition of the scheme members. We project the future contributions, accumulated funds, benefits, asset and liability values together with associated funding ratios. The results show that the fund is neither sustainable nor fair with respect to the two categories of members.
Keywords: guaranteed pension, hybrid cash balance scheme, projection, demography, finance
Received: 13 November 2021 Accepted: 15 September 2022
Published online: 22 November 2022