EVALUATING THE BENEFITS OF THE OLD AND THE NEW PENSION SCHEMES IN NIGERIA

Mathew Olasehinde Fashagba¹ and Emmanuel Olaniyi Dunmade²

¹Ibrahim Badamasi Babangida University, Lapai, Niger State, Nigeria
²Faculty of Management Sciences,University of Ilorin, Ilorin, Nigeria

This study is aimed at examining the difference between the retirement benefit of the old, pay-as-you-go pension scheme, and the new, contributory pension scheme (CPS). The data used in the study were obtained indirectly from secondary sources. In the study, the Analysis of Variance (ANOVA) and the Pearson Correlation methods are employed, aided by the SPSS for the purpose of data analysis. The study finds that the financial value of the retirement benefit of the old pension scheme is significantly higher than that of the new pension scheme. The study also finds that the benefits of the two pension schemes significantly follow the same trend. The study concludes that the new pension scheme pays out a lesser amount of the retirement benefit than the old. The study provides the recommendations for the efficient management of the investments in the pension fund so as to achieve a sufficient return in order to bridge the gap with respect to the retirement benefit between the two pension plans.

Keywords: retirement benefit, defined benefit, defined contribution, retirement income

JEL Classification: M21, G20