Effect of Pension Contributory Funds on Economic Development in Nigeria
Kingsley Mevrabor Akpeghughu *
Department of Banking and Finance, Rivers State University, Port Harcourt, Nigeria.
Suoye Igoni
Department of Banking and Finance, University of Nigeria, Nsukka, Nigeria.
*Author to whom correspondence should be addressed.
Abstract
This study assessed the impact of pension contributory funds on economic development in Nigeria with the application of time series data between 2004 and 2019. The study adopted the Error Correction Model (ECM) to analyzed the long-run Cointegration, Parsimonious short-run response and the Granger Causality. The cointegration technique results indicated a long run relationship between pension contributory funds and economic development (per capita income). The study further revealed in the ECM short run results that both the Private and public sector pension growth rates influenced the growth of per capita income in Nigeria at the minimal standard. The Granger causality results showed that pension contributory funds flow from the public sector and promoted the growth rate of the private sector within the Nigerian economy. The study recommended the Pension Administrators to constantly educate the employees both in the private and public sectors about the scheme benefit, and should also imbibe the culture of investing the inflows of funds contributed by the employees for short-term returns. Finally, employees should further be given financial and investment education by the employers to prepare their minds for an alternative livelihood when retired from active service.
Keywords: Pension contributory funds, per capita income, private sector growth rate, public sector growth rate, error correction model, Nigeria
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References
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