Macroeconomic Pressures,Housing Policy, and Retirement Income Security: An Empirica Assessment of Inflationand the 25%Residential Mortgage Withdrawal Policyon Retirement Benefits Adequacy under Nigeria's Contributory pension Schemel

ABSTRACT: Retirement income security under Nigeria’s Contributory Pension Scheme (CPS) is increasingly threatened by severe macroeconomic instabilities and structural shifts in policy design. This study empirically evaluates the individual and combined effects of persistent inflation and the 25 percent residential mortgage equity withdrawal policy on retirement benefits adequacy in Nigeria. Grounded in Modigliani’s Life-Cycle Hypothesis and Financial Repression Theory, the study develops an actuarial simulation framework using realistic market vectors as of October 2025 (nominal ROI of 19.07% and an inflation rate of 25.07%). The paper examines a 35-year service career case study tracking a 30-year post-retirement horizon. The empirical simulation reveals that while the 25 percent mortgage withdrawal policy successfully provides mid-career home ownership equity, it inflicts a structural shock on the core retirement asset base, reducing the terminal pension fund available for annuity conversion. Under conditions where inflation outpaces fund returns (yielding a negative real return of -4.80%) , the purchasing power of the programmed retirement income experiences a catastrophic collapse, losing over 90% of its real value within the first decade of retirement. The paper concludes that the concurrent exposure to pre-retirement housing equity liquidations and high inflation dynamics creates an old-age vulnerability trap. We recommend that the National Pension Commission (PenCom) introduce inflation-indexed programmed withdrawal adjustments and establish institutional framework adjustments to protect long-term retirement wealth.