PENSION REFORM AND CAPITAL FORMATION IN NIGERIA

Abstract

This study examines the impact of pension reform on capital formation in Nigeria. Data for the study were sourced from various issues of National pension commission Annual Reports and World Bank Development Indicators (database). The data were computed with the use of STATA, It was concluded that pension fund assets and pension contribution over the years have positive and significantly have impact on capital formation. While return on investment have a relationship but not significant to capital formation the implication of this finding is that the authorities concerned have not been able to use the pension fund asset and savings mobilized to boost capital formation in Nigeria. It was therefore recommended that, there should be more emphasis on the management of pension assets in the capital market as well as government bond, real estate and investment trust to boost capital formation of the country in Nigeria. Secondly, there should be prompt reconciliation between Pension Fund Administrators (PFAs) and Pension Fund Custodians. This will bring transparency and accountability to the system. Finally, PenCom should ensure effective monitoring, supervision and enforcement of the provision of the PRA 2004, which are the inevitable ingredients in the Contributory Pension Scheme towards capital formation.