The Funded Pension Scheme and economic growth in Nigeria

The Funded Pension Scheme and economic growth in Nigeria

In Nigeria however, life after retirement is dreaded by most workers. The fears of facing the future after retirement create an ambiance of disturbance among employees. Retirement is seen by workers as a transition that could lead to psychological, physiological and economic problems.

This study provided evidence on the effect of the operation of the funded pension scheme since its inception in 2004 on economic growth in Nigeria using error correction mechanism (ECM) and Ordinary Least Square (OLS) methodologies.

Findings revealed that the pension fund contributions from both private and public sectors in Nigeria increased greatly and constituted a huge investment fund in the capital and money markets. This increased liquidity in the economy and created employment opportunities as well as improvement in the investment climate.

The study concluded that with good risk and portfolio management by pension fund administrators and custodians, the contributory pension has the capacity to boost the Gross Domestic Product (GDP) in Nigeria and very convenient to retirees compared to the previous defined benefit scheme.

The study however recommended the removal of delay payment, administrative bottlenecks and corruption in the management of the pension fund in order to boost economic growth in Nigeria.