The contributory pension scheme and the financial system development in Nigeria

The article examined the influence of the contributory pension scheme on the financial system development in Nigeria. Evidence accumulated from both theoretical and empirical literature point to the power of contributory pension to deepen the financial system. An empirical work earlier done showed that the total domestic savings (TDS) increased during the post- pension period; and that the capital market capitalization rose significantly over the period. It was also observed that its implementation has created an impressive scenario whereby now pension funds account for 30% and 8% bond and stock markets capitalization, respectively. This is beside the increased activities in the life subsector of the insurance industry.

Keywords: pension, financial system development, contributory pension, pay-as-you-go.
JEL Classification: G230