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With the Nigeria’s Pension system ranking 64th globally, majorly due to its deficient sustainability and adequacy, Allianz Global has therefore, called on the government and all stakeholders of the pension industry on the need for further pension reforms to boost the system.
According to Allianz Global Pension Report, the coverage of the Nigerian pension system is still very low and limited access to financial services hampers the build-up of sufficient private old-age savings to cushion the lack of the public pension pillar.
As regards to sustainability of the system, Nigeria ranks also in the bottom third. It is advised that the harmonization of the retirement ages of the various professions and adjusting the retirement age in line with future increase in life expectancy would improve the long-term sustainability of the pension system further; the report noted.
Furthermore, the report stated that among the analysed countries, Nigeria has by far the most comfortable starting position especially due the fact that it has one of the youngest populations worldwide. Nevertheless, the number of people aged 65 and older is set to increase from 5.6 million today to around 16 million in 2050. Thus, there is a need for the introduction of a pension system with a broad coverage and for further improvement on the access to financial services.
“Retirement age is an important lever. Today, the average further life expectancy of a 65-year old is 17.8 years for women and 15.2 years for men and it is set to increase to 19.9 years (women) and 17.5 years (men) respectively in 2050. Consequently, the ratio of working life to time spent in retirement has declined markedly. Countries, which decided to adjust the legal retirement age or the increase of pension benefits to the development of further life expectancy like the Netherlands, have thus a more sustainable pension system than countries where postponing retirement further is still a taboo,” the report states.
Speaking, Chief Economist of Allianz, Ludovic Subran, said demographics and pensions have been eclipsed by other policies in recent years. “First and foremost, climate change and today the fight against COVID-19, if you ignore demographics it is at your peril, demographic change will soon be back with a vengeance.
Defusing the looming pension crisis and preserving generational justness and equality are key for building inclusive and resilient societies,” he noted.
