The Role of Pension Scheme in Capital Formation and Economic Development in Nigeria

Pension scheme offers workers opportunity to defer their wages for future gratification. Although there are so many challenges confronting the pension governance, the most notable ones are delay in payment of retirees’ allowance and the allegations of corruptions against pension officials. The pension scheme in Nigeria have witnessed notable reforms in 2014 till date, however this reform led to a shift from Defined Benefit pension scheme (DBS) to Contributory Pension Scheme (CPS). This study examines Pension Governance in Nigeria from 2014 to 2024, other objective assesses the impacts of pension scheme on the Nigeria economy, investigate the challenges of pension administration and suggest possible measure that will improve the pension administration in Nigeria. The mix research design which includes the descriptive, exploratory and ex-post facto research design was adopted in this study. The convenient and quota sampling techniques were utilized for the selection of the sample size, 375 questionnaires were administered to respondents, Data was analyzed using descriptive statistics coded into SPSS, the hypotheses were tested at Alpha level of 0.05 using the (X2) chi-square-based measure. The deferred wage theory was adopted as the theoretical framework of the study; this theory views the pension plan as a means of deferring some compensation until an employee retires. Findings from the study established that 68.3% of the sampled population acclaimed that the contributory pension scheme increases the gross domestic product of the country and also boost the capital and financial market. The study again, revealed that 80.3% of the sampled population believe that the contributory pension system has impacted the lives of retirees positively. The study concludes that the Contributory Pension Scheme increase the country’s (GDP) Gross Domestic Product of the country and accrued pension savings boost the economy of the country by creating employment for those employed in the sector, while, the pension allowance provides the retirees income to continue to invest in the development of the country’s economy. The need for pension administration to place the welfare of retirees above their personal needs in order to build a formidable pension system which will pave way for transparency was recommended amongst orders as panacea for the challenges confronting pension governance in Nigeria.

Pension Scheme, Capital Formation and Economic Development

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