Effects of Pension Reform On Household Savings In Nigeria
This paper investigates the effects of pension reform on household savings in Nigeria using primary data selected randomly from 182 households who have Retirement Savings Accounts (RSA) with Stanbic IBTC Pension Managers Limited through a structured, open-ended questionnaire .Using the Life-Cycle Hypothesis, the result shows that pension reform increased consumption and crowded out savings of workers. The study concluded that there is an inverse relationship between pension reform and households’ savings in Nigeria, the implication of this is that since the introduction of the reform, households have been unable to save due to the effects of the reform on their disposable income. The findings are consistent with the Life-Cycle model prediction as the theoretical analysis shows that pension reform caused both income and wealth effect. The study suggest that the Nigerian government must consciously put in place policies to cushion the effects of the reform on the savings behaviour of household coupled with a restructuring of the contribution pattern so as to reduce the burden of the contribution on workers.