An assessment of the effectiveness of the Nigerian 2004 pension reform policy

Abstract

This article assesses the effectiveness of the Nigerian 2004 pension reform policy. Whereas the old pension system was seen as vulnerable, inequitable and inefficient, there was also paucity of policy and academic literature before the pension reform. Interestingly, the pension reform policy is beginning to gain attention in the literature regarding policy learning and transfer. The emerging literature, notwithstanding no systematic attempt, has been made to investigate the effectiveness of the policy, which was amended in April 2011. This article fills the gap by assessing published literature and other media sources. The article notes the achievements of the new pension scheme inspired by the Chilean model of 1981 in comparison with the old scheme. This is indicated by the development of a strong pillar for the Nigerian economy, and the growing confidence and compliance in the system. But worryingly, the new scheme is yet to cover enough grounds, including the workers in the informal economy as well as address the grafting in the industry. The article recommends the strengthening of institutions of governance to walk the path of maximum benefit for the Nigerian workers. Further research efforts are also needed on how to formalize the informal economy, how the policy is affected by privatization and the global financial crisis, and how to address the padding of ghost pensioners. © 2012 Macmillan Publishers Ltd.