Pension Reform Act 2004 and its Controversies: Repeating or Learning from Past Mistakes?

Abstract

This study reviews briefly the causes of pension crisis in Nigeria in the previous pension schemes and discusses how the present pension reform will affect active employees when they retire. It also examined the level of compliance of the participants to some of the provisions of the present reform since its implementation. One of the reform provisions discussed in this paper states that retirees contributions be used to purchase life annuities from life insurance companies. However, the policy-makers seem not to be aware that mortality table based on life insurance experience is not suitable for use in connection with annuities for several reasons. This calls for the inclusion of actuarial profession as one of the implementing committee entrusted with the responsibility of investigating mortality experience of people in the country. This study examines some of these issues and suggests need to redesign pension schemes in Nigeria.

Keywords: Pension reform, annuities, retirees, schemes implications