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  • Date Submitted: 10/26/2012 05:30 AM
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DISCUSSION OF THE ANALYTICAL REVIEW OF THE PENSION SYSTEM IN NIGERIA PRESENTED AT THE NATIONAL CONFERENCE FOR THE REVIEW OF THE IMPLEMENTATION OF THE PENSION REFORM

BY

DR TIMIEBI A. KORIPAMO – AGARY,OON

INTRODUCTION

The reform of Nigeria’s Pension System became necessary because of the many problems experienced in both the public and private sector schemes. For the public sector the old system of defined benefits based on the Pay as You Go scheme became unsustainable because it depended on budgetary provisions at all tiers of government. This lack of adequate and timely budgetary provisions coupled with rising life expectancy, increasing number of personnel, and increase in wages and pensions, resulted in the untimely payment of benefits, which resulted in accumulation of huge pension liabilities that are yet to be fully settled.   For the private sector, there was poor implementation because of inadequate supervision and regulation of the system. Worse still many private sector employees were not even covered by any form of pension scheme.

The Pension Reform Act (PRA) 2004 was therefore enacted to address these manifest weaknesses of the old defined benefit pension schemes. The Pension Reform Act was to put in place a system that is sustainable and able to meet the goal of providing a stable, predictable and adequate source of retirement income for workers in the country. The Act introduced a defined contributory system that is fully funded, privately managed and based on individual accounts for all workers in both the public and private sectors. The Pension Reform Act also established the National Pension Commission, the only regulator and supervisor of all pension matters in the country.

One of the major advantages of the contributory pension scheme is the fact that it has decentralized the management and payment of pensions, particularly in the public sector. One of the major deficiencies in the public sector was a lack of transparency in its...

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