Impact of Contributory Pension Scheme on Workers’ Investments and Savings in Nigeria

Abstract

This paper analyses the Impact of Contributory Pension Scheme on employee savings and investment in Nigeria. The study derived its source of data mainly from Secondary Data and not a Primary Data. The paper concentrated on information and data on publications from National Pension Commission (PENCOM), from Journals from Insurance Brokers, Pension Fund Custodians, Pension Fund Administrators, Office of the Accountant General of the Federation and Pension Transitional Directorate (PTAD). The information gathered from majority of the publications showed that, younger people in both the Public and Private Sectors who commenced work shortly before the advent of the Contributory Pension Reform or Scheme or those who commenced work in 2004 or beyond will save more of their contributions since they have longer years in the service compared with workers who worked a longer years before the advent of Contributory Pension Act in 2004. The Defined Benefit Pension Scheme which is unfunded but totally provided in the Annual Statutory Budget is administered by the Pension Transitional Arrangement Directorate (PTAD), which will exist until the last pensioner under that scheme is dead. Accrued Pension Liabilities which attract a coupon rate 5% kept as a Bond with the Central Bank of Nigeria are also paid to Employees who were in service on or before the advent of the Contributory Pension Scheme on the 30th of June, 2004, repealed and re-enacted on the 1st of July, 2014 and are also part of the Contributory Pension Scheme. The study therefore concludes among others that the Nigerian Government should create more awareness and enlightenment campaign on the workers’ contributory pension scheme geared towards retirements. The scheme also encourages personal contribution, above the mandatory contribution of 8% by the Employee and 10% by the Employer as re-enacted in 2014.