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Defined Contribution Pension And Actuarial Expectation In Later Life For Active Employees

Author

Listed:
  • J.S. , Adeyele,

    (Department of Actuarial Science)

  • J.O. , Olujide,

    (Department of Business Administration)

  • G.M. , Ogungbenle,

    (Department of Actuarial Science)

  • Y.G., Jugu,

    (Department of Accounting)

  • S.L., Jim-Suleiman,

    (Department of Accounting)

  • N.R., Ikeobi,

    (Department of Actuarial Science)

  • D.K, Adamu,

    (Department of Actuarial Science)

  • J.A., Angyak,

    (Department of Actuarial Science)

Abstract

This study examined the Nigerians experience in Defined Contribution Model (DCM) by modeling the employees' monthly contributions for 28 years (2004-2032) based on the current contribution rates and developed models for converting these funds to the two retirement income security options provided under Pension Reform Act 2014. The study made used of Consolidated Academic University Salary Scale (CONNUASS) of Federal University to determine employees' monthly contributions towards their retirement income security. Data on mortality of retired employees were sourced from the pension offices. The bulk of these data were used to prepare Actuarial Tabular Model (ATM). Since the needed data in respect of mortality is limited in developing countries, Life Table (2003) for the total population in United States was extracted to develop annuity table which was in turn used to determine the annuity rates for all ages. The expected accumulated funds of employees were used to determine annual pension withdrawal for employees with either phased withdrawal or life annuity option. The results show that early retirement is not a good retirement decision for employees under the DCM, and they need to delay retirement even beyond the statutory age of 65 in order to get a fair actuarial price. The study recommended that there is need to review the present scheme in accordance to the responsibilities of the employers towards their employees.

Suggested Citation

  • J.S. , Adeyele, & J.O. , Olujide, & G.M. , Ogungbenle, & Y.G., Jugu, & S.L., Jim-Suleiman, & N.R., Ikeobi, & D.K, Adamu, & J.A., Angyak,, 2022. "Defined Contribution Pension And Actuarial Expectation In Later Life For Active Employees," Ilorin Journal of Business and Social Sciences, Faculty of Social Sciences, University of Ilorin, vol. 24(1), pages 147-164, February.
    • Handle: RePEc:ris:ilojbs:0097
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    References listed on IDEAS

    as
    1. Rob Rusconi, 2008. "National Annuity Markets: Features and Implications," OECD Working Papers on Insurance and Private Pensions 24, OECD Publishing.
    2. Roberto Rocha & Craig Thorburn, 2007. "Developing Annuities Markets : The Experience of Chile," World Bank Publications - Books, The World Bank Group, number 7162, December.
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    More about this item

    Keywords

    Retirement income security; annuity rate; defined benefit; defined contribution;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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