An assessment of adequacy of pre-retirement savings for sustainable retirement income under the Nigerian 2014 pension scheme

Sogunro Ashim Babatunde (), Adeleke Ismaila Adedeji () and Ayorinde Richard Olusegun ()
Additional contact information
Sogunro Ashim Babatunde: Department of Actuarial Science and Insurance, Faculty Business Administration, University of Lagos, Akoka, Yaba, Lagos, Nigeria
Adeleke Ismaila Adedeji: Department of Actuarial Science and Insurance, Faculty Business Administration, University of Lagos, Akoka, Yaba, Lagos, Nigeria
Ayorinde Richard Olusegun: Department of Actuarial Science and Insurance, Faculty Business Administration, University of Lagos, Akoka, Yaba, Lagos, Nigeria

Journal of Economics and Management, 2019, vol. 35, issue 1, 150-171

Abstract: Aim/purpose – The main objectives of this article are to estimate percentage of preretirement savings that is needed, based on the current salary scale, to sustain academic and non-academic staff of Federal Universities in Nigeria in retirement using University of Lagos as a case study. Design/methodology/approach – The methodology of the article was designed by modifying the life-cycle model of household behaviour combine with the target replacement ratio benchmarks for different income levels as used by Pension Commission 2004, expressed in 2013 earning terms. Finding – The research findings show that the lowest income earner with entry age of 25 years and retirement age of 65 years should, without any interruption throughout the service years, contribute a minimum of pre-retirement savings of 28.01% on an annual basis from his or her emolument to maintain the pre-retirement standard of living once he/she has ceased working. Research implications/limitations – The scope of this research study is subjected to some limitations: (1) scarcity of pension financial data in Nigeria; (2) the academic and non-academic staff of Federal Universities in Nigerian using University of Lagos as a case study. Originality/value/contribution – The study has established the minimum contribution rate into the Retirement Savings Account so as to meet the internationally acceptable replacement ratio for employees of the Nigerian Federal Universities.

Keywords: adequacy; replacement rates; actuarial assumptions; salary-scale and consumption smoothing (search for similar items in EconPapers)
JEL-codes: B26 C51 D15 D31 E12 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.22367/jem.2019.35.08 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vrs:jecman:v:35:y:2019:i:1:p:150-171:n:2

DOI: 10.22367/jem.2019.35.08

Access Statistics for this article

Journal of Economics and Management is currently edited by Ewa Ziemba

More articles in Journal of Economics and Management from Sciendo
Bibliographic data for series maintained by Peter Golla ().