Demographic Risks and Nigerian Pension Reforms
Posted: 11 Jun 2015
Date Written: June 2, 2015
Abstract
Nigerian families have supportive traditional financial networks based on consanguinity that serves as social security. By insurance theory, this is an inefficient risk distribution mechanism. The Pension Reform Act of 2004 aims at ensuring that improvident workers can avert old age poverty. But four million Nigerians are covered by pension out of 50 million working population with a population of over 160 million. Beyond this, demographic risks such as Gini coefficient, dependency ratio, life expectancy and late marriages may adversely affect the positive goals of the reform. While few Nigerian studies have investigated some demographic factors like mortality and fertility rates on poverty, none have analyzed the combined impact of critical demographic risks on Pension Reform (2004). Survey technique was used to elicit returned responses from 162 Lagos State Civil Servants. Using probit regression analysis, the study tests the propensity of changing demographics’ correlation to possible old age poverty. There is significant evidence that age, income, age at employment and age at marriage due to late marriages and degree of consanguinity of families in Nigeria will increase the probability of old age poverty. A higher rate of contribution is suggested by the employer while age of entry to pension scheme guides a flexible contribution of the employee.
Keywords: Demographic risks, Pension, Unemployment insurance
JEL Classification: J11 J32, J65
Suggested Citation: Suggested Citation