The Effect of Pension Fund Accounting on Retirement Income Security in Nigeria

This study examines the effect of pension fund accounting practices on retirement income security for Nigerian workers under the Contributory Pension Scheme. Since the enactment of the Pension Reform Act of 2004 and its amendment in 2014, Nigeria has transitioned from a largely unfunded defined benefit system to a contributory defined contribution framework administered by licensed pension fund administrators. However, concerns about fund valuation accuracy, investment return transparency, and administrative fee adequacy persist. This study uses a mixed-method approach, combining a survey of 105 retirees and active contributors in Lagos, Abuja, and Port Harcourt with content analysis of pension fund financial statements published by five major PFAs for the period 2020 to 2023. Pension fund accounting quality is assessed through asset valuation accuracy, income attribution clarity, and fee disclosure completeness. Retirement income security is measured using replacement rate achievement and fund balance adequacy indices. Regression analysis is applied. Results indicate that higher fund accounting transparency and accurate asset valuation are significantly associated with better retirement income outcomes. Contributors in PFAs with clearer fee structures reported higher trust and satisfaction levels. The study concludes that improving pension fund accounting standards is critical for protecting the retirement security of Nigerian workers. It recommends that the National Pension Commission mandate standardized accounting disclosure formats for all PFAs and publish annual fund performance scorecards for public access.

Keywords: pension fund accounting, contributory pension scheme, retirement income, PFA, PENCOM.