Contributory Pension and the Level of Old Age Poverty in Nigeria

Elderly people, most times, are retired from active service and face reduction in income and at the same time an increase in the level of expenditure as healthcare cost is increased. Contributory pension scheme is made mandatory for employees in Nigeria as a form of security against the future even though inflation sets to reduce the time value of money saved. This study assessed the influence of contributory pension on the level of old age poverty in Nigeria. The study is framed on the financial theory of defined pension benefit. Quantitative research method was used and secondary data collected over a sixteen-year period which ranged from 2004 to 2020 was gathered. Multiple regression was used to analyze the influence of contributory pension on the level of old age welfare in Nigeria. The result of the study shows that the contributory pension fund had a positive influence on the level of old age welfare while inflation had negative influence on the level old age welfare in Nigeria during the period of study. It is concluded from this study that contributory pension scheme which takes inflation into consideration in form of adjustment mechanism has a significant influence on the level of old age welfare in Nigeria. It is therefore recommended that pension Act and practice in Nigeria should be revised to ensure that the risk of inflation is properly mitigated.