The Sustainability of Old Pension Benefits Using Statistical Analysis

Abstract

The role of insurance is to reimburse. Pension policies are instituted to secure the future income of individuals once they are out of active service. The Social Security and National Insurance Trust (SSNIT) has the primary responsibility to collect contributions from its member's whiles they are in active service, invest it and pays it back to them at the due time. The research sought to evaluate the sustainability of the old age pension benefit of SSNIT using statistical analysis. The Historical research design was adopted in this study. The number of pensioners and the total monthly payment made to them from 2011 to 2017 was used for the study. Analysis revealed that, the number of Pensioners follows the Negative Binomial Statistical Distribution whiles the total monthly payments also follows the Lognormal (3P) Distribution. Both distributions are positively skewed. In the quest to forecast, stationary was established through differencing of the data, the sample ACF and the sample Partial Autocorrelation Function (PACF) of the differenced data were considered to generate possible models after which the AIC, AICc and BIC of the candidate models under the various data were examined and those candidate models with the smallest AIC, AICc and BIC were chosen as the best-fit models among the candidate models and used for forecasting. Forecast for three years was done for both number of Pensioners and total monthly Payments. Both Forecasted values showed an increasing trend.