Operating Costs, Liquidity, and Demographic Pressures in Tanzania's Reformed Public Pension System (2004–2024)

The efficiency of public pension systems is critical for accumulating old-age savings and reducing fiscal pressures. This study evaluated Tanzania’s reformed public pension system from 2004 to 2024, covering pre- and post-merger periods, using longitudinal financial data and benchmarking indicators, including cost-to-contribution, cost-to-asset, payout, and dependency ratios, against regulatory and OECD levels. One-tailed sample t-tests compared efficiency and sustainability metrics against benchmarks. Findings show that operating costs averaged 2.8% of assets and administrative cost-to-contribution averaged 11.8%, exceeding the OECD average of 1.6% and the regulatory ceiling of 10%, respectively. Although operating-cost ratios declined after the 2018 restructuring, costs generally remained above selected international benchmarks, indicating systemic inefficiencies. Sustainability indicators also deteriorated, with the number of contributors per pensioner falling from 28–29 in 2004 (pre-merger average: 16) to only 10 in 2024. While still above the OECD average of 3 to 4 contributors per pensioner, both dependency and payout ratios increased after the merger, indicating rising demographic and liquidity pressures. This descriptive, benchmark-based study provides empirical evidence on the efficiency of Tanzania’s restructured public pension system and identifies changes associated with the reform period rather than establishing causal effects of the reforms. The findings indicate structural inefficiencies and that the merger did not substantially improve efficiency or sustainability. This underscores the urgency for deeper structural reforms through stronger governance, regulatory oversight, cost controls, and membership expansion. By providing rare longitudinal evidence, the study offers insights into ongoing policy and academic debates on the efficiency and sustainability of public pension systems in developing economies.