Abstract
Defined benefit (DB) pensions have long served as a crucial tool for addressing old-age security challenges globally. However, in Nigeria, their relevance diminished after June 2004, reflecting a broader trend where these schemes lost favour due to the financial strains of an aging population. In this context, the discussion has shifted toward retiree life annuities, which provide income contingent upon survival, within defined contribution (DC) pension schemes. Advocates argue that the annuity market could effectively replicate the benefits of traditional DB schemes for retirees who choose this option for income. This study introduces various models grounded in realistic assumptions about accumulated funds and annuity gains/losses for underwriters. It outlines the necessary criteria for retiree life annuities to effectively function as a substitute for DB schemes within the DC framework, thereby enriching the ongoing discourse on pension reform in Nigeria.
Keywords:
retirement saving
annuity gains/loss
defined benefit
defined contribution.
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