Pensions and pension reform in Nigeria

Abstract

Welfare systems have been undergoing reform in most developing countries, and this is a major component of the International Monetary Fund/World Bank structural reform programme for developing economies. Unexpected change will occur in the relationship between people and those administering this welfare security scheme, in terms of the gains provided and financing, which will be a result of the change in the structure of the economy in countries where the state is expected to provide welfare assistance ‘from cradle to grave’. However, pension schemes in transition economies were used to alleviate the effect of output loss on certain strata of the population and the increased income inequality that pervaded the economies. In Nigeria, the government has claimed to be using the pension system to lessen and the suffering of its retired public workers, so that they will not have to suffer after disengagement from public office. It is against this backdrop that we evaluate the effect of public pension reform on civil servants in Nigeria using the error correction model.