Nigerian Journal of Banking and Financial Issues (NJBFI)

Pension Reforms And Its Implications On Retirees’ Welfare; Experience From The Investment Performance Of Selected Pension Administrators In Nigeria 2014- 2023

Abstract

Pension reform is pivotal in shaping the economic stability and welfare of retirees in Nigeria. This study explores how pension fund assets, pension fund expenditures, and pension fund contribution density induced retiree welfare. The analysis with the aid of panel data, underscores that robust pension fund assets, characterized by diversified and well-managed investments, enhance financial security for retirees by ensuring consistent and adequate disbursements. Conversely, inefficient management and allocation of these assets can exacerbate financial vulnerabilities among the enrollee. Moreover, pension fund expenditure, encompassing both administrative costs and benefit payouts, significantly influences the sustainability and efficacy of pension schemes. High administrative costs can erode the fund's value, reducing the benefits available to retirees. On the other hand, prudent expenditure management enhances fund longevity and benefit adequacy. Lastly, pension fund contribution density, referring to the regularity and monetary value or amount of contributions made by workers, directly correlates with the size of retirement benefits. Higher contribution density typically results in more substantial pension benefits, thereby improving retirees' welfare. In Nigeria, enhancing retiree welfare through pension reform necessitates strategic management of fund assets, cost-efficient expenditure practices, and policies that encourage consistent and substantial contributions. This holistic approach can mitigate poverty among the retirees, promote economic stability, and foster a dignified post-retirement life. In support of this idea, Onaolapo (2022) described financial inclusion as a practice that ensures that all participants in an economy can easily access, be available, and use the formal financial system. According to Kassim (2023), A financial system that is inclusive provides credit to all "bankable" persons and enterprises, insurance to all eligible individuals and businesses, and savings and payment services to everyone. Financial inclusion, in Kassim's opinion, is just the availability of financial services to all people, not their likelihood of using them all. People ought to have access to a variety of financial services as their standard of living grows.