| dc.description.abstract | The KNEC pension scheme is under management by a private administrator. Like all such
administrators, Liberty Pensions ltd is under bidding of the sponsor to adopt the new pension
plan for and on behalf of KNEC. It is known that private pensions are not generally actuarially
neutral. To the contrary, an important function of pension plans is to structure benefits so as to
induce employees to exit the organization at a time consistent with the employer’s preferences.
The organization is posited to have a target retirement date when the value of compensation paid
to the employee equals the value of the employee’s productivity in the organization.
On the other hand, the employees are posited to select their desired retirement dates by
maximizing remaining lifetime utility, as a function of consumption and retirement leisure,
subject to time and money constraints. The time constraint recognizes the finiteness of the
employee’s expected remaining lifetime. The money constraint however, is determined by labour
market earnings for as long as employment continues and by pensions and social security after
retirement.
This study therefore shall assess the income-effect impact on the employees due to the revised
contribution scheme. At the same time, the study will find out if there was another option for
KNEC employees to choose another pension plan without being seen to contradict the
government position. | en_US |
