Abstract:
This study is concerned with establishing the causes and effects of early withdrawal from retirement saving accounts. The specific objectives of the study were to examine the causes and effects of early withdrawal to members from social security schemes and examine the members understanding over the impact/effects of the early withdrawal.
The study was conducted in NSSF Dar es salaam offices to include Kinondoni, Temeke, Ilala and Head office. About 100 respondents participated in the study.
Research method that was used in this study is case a study. In the study, the information was obtained through questionnaires that were distributed to the respondents in Kinondoni, Temeke, Ilala and Head office. The analysis has been done by the help of a Statistical Package for Social Sciences (SPSS).
From the study it was revealed that early withdrawal is associated with a number of life changing circumstances. A need for housing, capital, job loss, on set of poor health and education needs compel members to make early withdrawal.
As from the findings it’s also revealed that there are effects of early withdraw to both members, social security institutions and also to the government. Such effects are increase number of elderly dependents due to loss of pension and old age benefit, Non qualification of old age pensions, and reduction of investment ability to the funds institutions.
Study findings bring to light the fact that early withdrawal needs to be controlled or even put to an end. But unless an alternative source of income to accommodate these other life changing circumstances is established.
To regulate members’ early withdrawal behaviour, the study recommends the introduction of unemployment benefit for members who experience job loss, provision of affordable loans to members, the introduction of integrated saving policy and the improvement of benefit and services provided by the social security institutions.
