CONTRIBUTORY PENSION SCHEME AND ECONOMIC GROWTH IN NIGERIA

Abstract

The lingering and persistent challenges confronting the investments of pension fund assets stimulate the interest in investigating the impact of contributory pension schemes (CPS) on economic growth in Nigeria. Hence, this study examined the impact of the contributory pension scheme on the Nigerian economy. The data employed for the study were secondary and retrieved from the PenCom website, CBN website, and the World Development Indicator. Augmented Dickey-Fuller was employed as the estimation technique. Results showed that the four components of pension fund assets (Federal government of Nigeria Securities of the pension fund, Domestic ordinary share of pension fund, Local market money securities of the pension fund, and Real estate property of the pension fund) significantly influenced Nigeria's economic growth. The macroeconomic variables included in the model, inflation and interest rate, significantly influence economic growth, while the exchange rate was insignificant. Consequently, the study concluded that domestic ordinary shares, the federal government of Nigeria securities, local market money securities, and real estate property of the pension fund are major drivers of economic growth in Nigeria. Therefore, the study recommended that PenCom should continue to invest in federal government securities, considering the low risk associated with the investment. Similarly, Pension Fund Administrators should also continue to invest in domestic ordinary shares because, in the long run, the value of the shares would appreciate, and there would be a higher return on the investment.