The Nigerian, Swedish and Chilean Pension Systems: A Comparative Analysis of Schemes and Reforms

Abstract

The contemporary global debate about pension reforms is based mainly on the concern for the long-term financial viability of existing government operated pension systems. Against this background, Nigeria, Sweden and Chile responded to the challenges posed by their pension systems by initiating reforms. While Chile and Nigeria completely moved from a defined benefit system to a defined contribution system, Sweden chose a “hybrid”, a model which has received wide acclaim by social security experts. Given the interest pension systems and reforms have generated globally as well as in Nigeria, a cross-country comparative analysis is imperative to bring into sharp focus the specific differences and similarities in these three pension reforms if any. Thus, this study comparatively evaluates the Nigerian, Swedish and Chilean pension reforms as a means of enriching ongoing global debate and crosscountry comparisons on pension reform experiences. Guided by a three dimensional classification framework which describes the options available in reforming a pension system, three core benchmarks were used for this comparative analysis. These are the objective(s) of reform, the model of reform adopted, and the likely outcomes of reform vis-à-vis meeting the redistribution, saving and insurance functions of a pension scheme. Results indicate that the Chilean and Nigerian models are less likely to achieve the redistribution and insurance functions of a pension scheme while the Swedish model is better placed to achieve all the three key functions of a pension system. It is recommended that opportunities for achieving the redistribution and social insurance functions of a pension scheme should be explored in subsequent amendments to the pension legislation.

Keywords: Demographic crisis, Pension reform, Public policy