PENSION INVESTMENT FUNDS ANALYSIS: A VARIANCE-COMPARISON TESTS OF NON-CONTRIBUTORY (PRE) AND CONTRIBUTORY (POST) SCHEMES IN NIGERIA

Abstract

In Nigeria, pension was established in 2004 through the Pension Reform Act, 2004 and since then, pension schemes have manifested in twofold: ‘old’ and ‘new’. The Pension Act No. 102 of 1979 is the “old pension” (non-contributory) and Pension Reform Act of 2004 (including the restructured/modified Pension Act, 2014) is the “new pension” (contributory) scheme. In this paper, we comparatively evaluated both the non-contributory (pre) and contributory (post) pension schemes in Nigeria. In order to do this, secondary data of pension investment funds was obtained during the period 1994-2014. Based on the analysis of data, we found that the contributory (post) scheme is healthy, reliable and poised towards helping retirees survive as soon as they retire from service. Thus, the contributory (post) scheme significantly improved as a result of the reform in Nigeria, especially in the area of pension investment funds. On the basis of the findings, it was recommended among others that there should be an unrestricted retirement savings scheme and non-remittance of pension contributions by employers to PENCOM. Also, a better return on investment and service delivery from pension fund administrators should be enhanced so as to enhance pension investments and voluntary contributions. Besides this, the internal procedures should be improved upon so that contributions and returns on pension investments due to retirees can be efficiently and swiftly made from pension fund administrators to pensioners on retirement.