A CRITICAL ASSESSMENT OF THE IMPACT OF THE PENSION REFORM ON NIGERIAN BANKING SYSTEM STABILITY
Abstract
The study was carried out to examine the impact of pension reform and banking system stability in Nigeria. To achieve this objective, four research questions and a research hypothesis were formulated to guide the study. The data was collected from both primary and secondary sources. The primary data were collected with the help of a well-structured questionnaire of two sections administered to staff and management of selected Commercial banks in Abuja.
The collected data were analyzed with tables and simple percentages to analyze the research questions while Chi-square and SPSS statistical package was used to test research hypotheses. The study reveals that there is a significant relationship between the impact of pension reform and banking system stability in Nigeria… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
The exact nature of the impact of pension reform on the banking system stability is context-dependent; that is, it depends on whether the financial system is developed or underdeveloped. Available data show that the introduction of private pension funds facilitates the development of the financial sector, particularly those economies that have underdeveloped financial sector and regulatory infrastructure (Quisser, 1999). It is also true that the availability of sufficient financial instruments has a positive impact on the pension reform process (Quisser, 1999).
Furthermore, it is a trite knowledge that a shift from the state pay-as-you-go system to a funded pension system creates huge capital accumulation (Diamond, 1995). The funds that accumulate over the intervening years prior to retirement must be invested in, say, securities that earn adequate returns capable of matching maturing pension liabilities. Hence, to speed up the reform process, there must be available a sufficient array of financial securities that will absorb the accumulated funds.
A deep capital market provides diverse investment instruments such as insurance products, shares, and bonds, both government and commercial. Most developing economies have very shallow capital markets (Quisser, 1999). It is on account of this that other macroeconomic policies like privatization of government enterprises get incorporated into the pension reform program in order to deepen the market.
As these enterprises are privatized, there follows an increase in the available financial instruments to absorb the capital accumulation that contributory pension funding engenders. This translates to the spontaneous development of the domestic capital market.
By the same token, it is to be expected that activities in the life subsector of the insurance industry will be sped up. Annuity contracts and life contracts constitute major investment outlets for pension accumulated funds. The insurance industry also invests in the equity and bond subsector of the capital market, being one of the dominant institutional investors in the capital market.
In mandatory Defined Contributory (DC) pension scheme, workers are often required to purchase term life and disability assurance in order to cover them and their dependants from accident or death prior to reaching retirement age (Stiglitz and Ug, 1996)… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
Pension Systems provides retirement benefits, for some years now, have come under severe pressure of a global proportion (Lindsay, 2009; Ellison, 2011). Factors linked to the crisis include the escalating costs of government expenditure in other sectors, the growing proportion of old people in the global population, increasing life expectancy and the impact of the recent global financial crisis (Alles, 2010).
The Nigerian dimension highlights issues that border on sheer crass corruption, inadequate budgetary allocations to settle pension debts, among others, as the bane of the old pension system (Uwujaren, 2004; Oloja, 2010; Onwuamaeze, 2011)… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
1) To examine the relationship between pension reform and revenue mobilization in the banking industry in Nigeria
2) To spotlight the relationship between pension reform and the financial performance of banks in banking industry in Nigeria… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
The Concept of Pension
Pension according to Fapohunda (2013) is simply the amount set aside either by employer or an employee or both to ensure that at retirement, there will be something for employee to fall back on as income. It ensure that at old age workers will not be stranded financially. In order words, pension is aimed at providing workers with security by building up plans that are capable of providing guaranteed income to them when they retire or to their dependants when death occur.
Hence, it is through an organised pension scheme that an organisation can demonstrate that it has the interest of its employees at heart… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
Pension Reform and Implementation of Public Policy
Voters elect governments to solve social problems that are threatening their happy living. Governments thus resort to designing huge array of programmes through which public goods are delivered to the citizen. A sizable literature has been devoted to finding answers to problems limiting programme performance… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
As earlier intimated, this section of this chapter is devoted to reviewing related theory that can enhance the understanding of the subject matter of research. In any academic analysis, better understanding can only be achieved through the instrumentality of theoretical farming of the phenomenon.
In this scenario, certain theories are going to be reviewed and thereafter see whether the contributory pension scheme (i.e. 2004 Pension Reform in Nigeria) fit into any of them both in character and actions and/or principles (i.e. assumptions) in solving the hitherto fundamental objective of pension (i.e. workers welfare in retirement).
Therefore, for the purpose of this study, the Rational Comprehensive Theory by H. A. Simon on public policy making is adopted and therefore reviewed before applying it to explain this research work… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
METHODOLOGY
Research Design
The research design of this study is a survey based on the use of a structured questionnaire. The researcher in this type of research design has no control over the variable from which the opinions of respondents were elicited. It enables hypothesis to be tested empirically and logical conclusion, which can be generalized to the entire population drawn from the sample used for the study.
The Staff of the Commercial banks operational in Nigeria constituted the population of this study. This population spread across over 22 commercial banks and 6 extra public officers who are occupying positions related to pension reforms. The numerical strength of the population is put at 3,981.
Two hundred (200) respondents were drawn from the population of the managers in Lagos State as the sample of this study.
The stratified random sampling technique was adopted in drawing the sample of this study from eight out of the 22 Commercial banks. The choice of this technique is informed by the fact that it gives every unit the probability chance of being selected. It also ensures an equal degree of representation in drawing respondents from the 22 Commercial banks selected for this study.
RESEARCH FINDINGS AND DISCUSSION
The data presented below were gathered during fieldwork.
Bio-Data Of The Respondents
Table 1 Gender of the respondents
|
Frequency |
Percent | Valid Percent |
Cumulative Percent |
||
| Male |
144 |
72.0 | 72.0 |
72.0 |
|
| Female |
56 |
28.0 | 28.0 |
100.0 |
|
| Total |
200 |
100.0 |
100.0 |
||
Field survey, March 2020
Table 1 above shows the gender of the respondents 144 of the respondents which represent 72% of the population are male 56 of the respondents which represent 28% of the population are female.
NOTE: based on the data above, we found out that the male participated more than the female in the exercise… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
SUMMARY, CONCLUSION, AND RECOMMENDATIONS
This study was carried out to examine the impact of pension reform and banking system stability in Nigeria. To achieve this objective, four research questions and a research hypothesis was formulated to guide this study. The use of questionnaires was the most widely used for data collection techniques from 200 staff and management of the selected Commercial banks.
The findings revealed that; From table 7, about 182 of the respondents out of 200 agreed that there is a significant relationship between pension reform and revenue mobilization in the banking industry in Nigeria… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
Conclusion
Just as most government programs and policies experience some form of challenges hampering attainment of its objectives, and mostly necessitating intervention to remedy the trend, also has the issue of pension in Nigeria faced with a lot of serial crises of administrative, financial and structural problems before 2004… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
Based on the findings of this study, the researcher made the following recommendations:
The current practice whereby every new employee is required to be registered into the scheme at their point of entry as part of their documentation processes should be sustained, and further effort should be made to initiate communications with the new entrants to ensure that their entry into the scheme is hitch free… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
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