FEW people in Africa are fortunate enough to have savings to fall back on in their old age. Having enrolled in a voluntary state-run pension scheme, Stephen Okikiola was always luckier than most. But it was not until Nigeria obliged firms with five or more employees to provide workers with pensions in 2004 that the former pharmaceuticals executive really started accumulating cash. “It’s good to be able to rely on those monthly payments now that I am retired,” he says.Nigeria has spent a decade resurrecting its pension system. Back at the turn of the century, government employees were enrolled in a defined-benefit system (in which eventual payments are fixed). It had run up unfunded liabilities of 2 trillion naira ($12.9 billion). Governments seldom put aside enough money to pay existing pensioners, let alone to cover future costs. Retirees often went unpaid. Most private companies, meanwhile, ignored their obligation to provide pensions for their workers. At those that did, allegations of mismanagement and fraud abounded.All this changed with the reforms of 2004, which not only instituted mandatory pensions at most private firms, but also converted the government scheme from defined-benefit to defined-contribution (in which the risk of poor investment returns lies with the participants, not the sponsor). The management of the government scheme was also outsourced, and a...
from The Economist: Finance and economics http://www.economist.com/news/finance-and-economics/21627721-after-unpromising-start-nigeria-beginning-encourage-local-saving-and?fsrc=rss|fec
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