The Imperative of Regular Pension Adjustments for Inflation in Nigeria: A Call for Legislative Action

Abstract

Nigeria’s pension system, governed by the Pension Reform Act 2014, aims to provide a sustainable and equitable retirement income for workers in both public and private sectors. However, inflation, which has risen significantly, erodes the purchasing power of pension benefits, leaving retirees vulnerable to economic hardship. However, the absence of a statutory mechanism for regular pension adjustments to account for inflation increases poverty among pensioners, undermines the objectives of the Contributory Pension Scheme (CPS), and threatens the wellbeing of pensioners as well. This policy brief underscores the urgent need for legislative action to institutionalize automatic, inflation-indexed pension adjustments. It proposes amendments to existing pension laws and the establishment of a robust framework to ensure pensions remain adequate in the face of economic fluctuations, thereby promoting retiree welfare and aligning with global best practices.