Aduragbemi Omiyale
By Aduragbemi Omiyale
A new report by an international financial services provider, Allianz, has disclosed that the Nigerian pension system is at the bottom of the global rankings, scoring 4.3 points in the Allianz Pension Index (API).
In the research made available to Business Post on Wednesday, it was disclosed that Denmark, The Netherlands, Sweden, New Zealand, and the United States topped the chart with 2.2 points, 2.6 points, 2.6 points, 2.8 points, and 2.9 points, respectively.
The survey, titled Global Pension Report, which is in its second edition, analysed 75 pension systems around the globe using the API, which consists of three pillars: Analysis of basic demographic and fiscal conditions as well as determination of the sustainability (e.g. funding and contribution periods) and adequacy (e.g. degree of diffusion and pension level) of the pension system.
A total of 40 parameters were considered, with values ranging from 1 (very good) to 7 (very poor). In the weighted sum of all parameters, the evaluation of the respective system crystallizes into one overall score.
With an overall score of 4.3 points, the Nigerian pension system is at the bottom of the global rankings due to the low coverage of the pension system.
To address the issues observed during the study, it was noted that access to financial services and financial literacy need to be further improved to foster private pension provision, especially against the background that private households’ net financial assets are also still rather low in international comparison.
Nigeria, however, has two big advantages: it (still) has financial leeway as public spending for the elderly is very low, and it will remain a very “young” country: the old-age dependency ratio is expected to rise only moderately to 6.8% by 2050 – Nigeria is set to be one of the countries with the youngest population worldwide.
Commenting on the report, the chief economist at Allianz, Ludovic Subran, said, “Automation, digitalisation and artificial intelligence are enabling universal access to education and thus new concepts of work.
“The dissolution of the rigid dichotomy between employment and retirement currently exists only for a privileged few. The pension system of the future starts by rethinking the world of education and work for all.”
A co-author of the report, Michaela Grimm, disclosed that, “The latest data from China, Korea or Italy, for example, point to speedup of demographic change.
“In particular, birth rates are developing even worse than assumed, despite all family policy efforts. But it doesn’t help to lament; we have to face the facts: The intergenerational contract has become fragile.
“The younger generations Y and Z, in particular, are being called upon to make (even) greater provision for old age themselves. The inconvenient truth is: they have to work longer as well as to save more and in a more focused way.”
Allianz services 49 markets in Africa through offices in Cameroon, Côte d’Ivoire, Ghana, Kenya, Madagascar, Morocco, Nigeria, Senegal, Uganda, Burundi, Egypt and South Africa – through Allianz Global Corporate & Specialty.
