Contributory Pension Scheme and Workers Investment in Nigeria

Abstract

The study investigated the relationship between contributory pension scheme and workers’ investment in Nigeria from 2007 to 2021. Specifically the study assessed the relationship between private sector contribution and workers’ investment in Nigeria; examined the relationship between public sector contribution and workers’ investment in Nigeria; and examined the relationship between total contribution and workers’ investment in Nigeria and also employed workers investment (WI) as independent variable while Private Sector Contribution (PRSC), Public Sector Contribution (PUSC), and Total Contribution (TC) as dependent variable. The study also employed Engle Granger Causality Test as estimated technique, the result revealed that a causal relationship between contributory pension scheme and workers investment in Nigeria. Evidence from the result revealed that there is a unidirectional relationship from private sector contribution (LNPRSC) to workers investment (LNWI) (6.41808, 0.0217***), also, there is a unidirectional relationship from public sector contribution (LNPUSC) to workers investment (LNWI) (13.5808, 0.0027***). Furthermore, there is a unidirectional relationship from total contribution (LNTC) to workers investment (7.92275, 0.0127***) and concluded that the direction of the flow comes from pension contribution scheme to worker investment. Therefore, recommended that pension regulatory authorities in Nigeria should compel strict compliance with the relevant provisions of the Act in order for the workers investment to experience the expected quantum growth; and the stakeholders should review the contributions to increase the volume of pension benefits to enable retirees take care of their basic needs at retirement.