THE PROBLEMS AND CHALLENGES OF NIGERIA CONTRIBUTORY PENSION SCHEME TO NIGERIA CIVIL SERVANTS

ABSTRACT

This research work is on the problem and challenges of Nigeria contributing pension scheme to Nigeria civil servants specifically as it effect regular payment of pension, arrear/debt of pension, issue of ghost pensionnaire, effect of change of jobs and pension administrator and the level of implementation and supervision of rules, regulation and standards in the industry.

The researcher employed questionnaire, chi-square for the research work. This method was applied because information could be source from Nigeria Civil Servants PenCom workers and pensionnaire retirees.

The result indicate that payment of pensionnaires are not regular, arrears/debt of pensionnaires has not been cleared, issued of ghost worker are still not cleared, and low level implementation and supervision of rules and regulation of PenCom; all these constitute problems and challenges for PenCom and pensionnaires.

Finally,  Having found the above problem and challenges of Nigeria pension scheme to Nigeria Civil Servant the researcher recommended that an institution should be build to train staff to handle pension matter and serious measure should be taken to fish out ghost workers and pay arrears of pensionnaires.

TABLE OF CONTENT

TITLE PAGE    –       –       –       –       –       –       –       –       –       i

CERTIFICATION     –       –       –       –       –       –       –       –       ii

DEDICATION  –       –       –       –       –       –       –       –       –       iii

ACKNOWLEDGEMENT    –       –       –       –       –       –       –       iv

ABSTRACT      –       –       –       –       –       –       –       –       –       v

TABLE OF CONTENT      –       –       –       –       –       –       –       vi

CHAPTER ONE: Introduction

1.1   Background of Study       –       –       –       –       –       –       1

1.2   Statement of problem      –       –       –       –       –       –       4

1.3   Objective of Study    –       –       –       –       –       –       –       5

1.4   Research Questions –       –       –       –       –       –       –       6

1.5   Statement of Hypothesis –       –       –       –       –       –       6

1.6   Scope and Limitation of Study –       –       –       –       –       7

1.7   Significant of Study –       –       –       –       –       –       –       8

1.8   Definition of Terms  –       –       –       –       –       –       –       9

REFERENCES         –       –       –       –       –       –       –       –       11

CHAPTER TWO: Review of Related Literature

2.0   Introduction     –       –       –       –       –       –       –       –       12

2.1   Meaning of Contributory Pension Scheme       –       –       –       13

2.2   Types of Pension Scheme Reform    –       –       –       –       15

2.3   Review of the Nigeria Pension System Pension Policies and Development in Nigeria        –       –       –       –       17

2.4   Feasible Options for Effective Pension System –       –       20

2.5   Statement of Key Principles     –       –       –       –       –       22

2.6   Goals and Objective of the Pension Reform Act 2004      –       23

2.7   Institutional and Legal Framework  –       –       –       –       30

2.8   Implication of the Contributory Pension Scheme     –       32

2.9   Overview of the Act Investment and Risk Management    –     35

2.10 Benefits of the Pension Scheme       –       –       –       –       –       39

2.11 Role of Financial Institution in Pension Administration   –       –       -42

2.12 Opportunities and Challenges for Financial Institutions in Pension Industry      –       –       –       –       45

• Problems and Challenges before Pension Industry in 2010      –     – 49

REFERENCES –       –       –       –       –       –       –       –       59

CHAPTER THREE: Research Design and Methodology

3.1   Introduction     –       –       –       –       –       –       –       –       62

3.2   Research Design      –       –       –       –       –       –       –       62

3.3   Population of the Study   –       –       –       –       –       –       63

3.4   Sampling procedure –       –       –       –       –       –       –       64

3.5   Data Collection        –       –       –       –       –       –       –       –       65

3.6   Test of Validity and Reliability of Research Instrument         –    – 65

3.7   Procedure for Data Collection  –       –       –       –       –       66

3.8   Questionnaire Design      –       –       –       –       –       –       66

3.9   Data Analysis   –       –       –       –       –       –       –       –       67

REFERENCES –       –       –       –       –       –       –       –       68

CHAPTER FOUR:    Presentation and Analysis of Data

4.1   Introduction     –       –       –       –       –       –       –       –       69

4.2   Data Presentation    –       –       –       –       –       –       –       69

4.3   Test of Hypothesis   –       –       –       –       –       –       –       83

4.4   Analysis of Data       –       –       –       –       –       –       –       88

CHAPTER FIVE:

5.0   Summary of Findings, Conclusion and

Recommendation     –       –       –       –       –       –       –       90

5.1   Summary of Findings      –       –       –       –       –       –       90

5.2   Conclusion      –       –       –       –       –       –       –       –       91

5.3   Recommendation for Policy     –       –       –       –       –       92

5.4   Area of Further Study      –       –       –       –       –       –       93

BIBLIOGRAPHY

APPENDIX

CHAPTER ONE

1. BACKGROUND OF STUDY

1.1   INTRODUCTION

The Nigeria Pension Schemes exist to provide post- retirement benefits to employees. It was introduced by the colonial master to provide income and security for old age British citizen working in the country upon retirement.

According to Adesina B. (2006:7) Nigeria first ever legislative instrument on pension matters was the pension ordinance of 1951, which had retrospective effect from 1^st January, 1946. Then followed by the National Provident Fund (NPF) scheme established in 1961 was the first legislation enacted to address pension matters of private organizations. Pension Act No. 102 of 1979 came up 18 years later, as well as the Armed Forces Pension Act No. 103 of the same year. In 1987 Police and other Government Agencies’ Pension scheme was enacted under Pension Act No 75. This was followed up by the Local Government Pension Edict which foresaw the establishment of the Local Government Staff pension Board of 1987.

By 1993 the National Social Insurance Trust Fund (NSITF) scheme was established by Decree No. 73 of 1993 to replace the defunct NPF, in 1994 employees in private sectors were equally accommodated by the scheme, for lost of employment income in old age, invalidity or  death.

Most pension schemes in the public sector have the problem of been poorly funded or unfunded, owing to inadequate budget allocation. This situation resulted to outstanding pension deficits of about two trillion naira before the commencement of the Pension Reform Act of 2004 (PRA). A part from this the administration of the scheme was generally weak, inefficient and non transparent. There was no authenticated list/data base on pensionnaires, while 14 documents are required to file pension claims. Also there was a restrictive and sharp practice in the investment and management of pension fund, this created the problem of pension liabilities to the extent that pensionnaires were dying on verification queues and over three hundred parastatals schemes were bankrupt before the new scheme came on board.

On the issue of private sector, most employees were not covered by any form of retirement benefit arrangements. Most of their pension schemes were that of resignation rather than retirements. Therefore at that period the pension schemes in Nigeria were largely unregulated, without standard or supervision and highly diversified before the advent of the PRA 2004. Meanwhile, before the enactment of Pension Reform Act of 2004, there were three regulators, namely Securities and Exchange Commission (SEC,) National Insurance Commission (NAICOM) and the Joint Tax Board (JTB). (Ahmad M. K. 2006:2).

Moreover, the Pension Reform Act of (2004), according to Atedo N.A (2006:19) ‘the Act’ a compulsory contributory pension scheme (“the scheme” or “CPS”) has been established for all categories of workers in the Federal Capital Territory, Federal Public Service and in the Private Sector. This scheme waved the era of pay-as-you-go and put in place a full funding of scheme which is compulsory for all. It provides the categories of schemes to apply to the National Pension Commission (‘Pension’) to continue but be managed according to the Act. The major differences between the new and previous scheme are under the Contributory Pension Scheme (CPS) employer and employees make founded contributions into a Retirement Savings Account (‘RSA’) for the benefit of the employee or his legal beneficiaries under the CPS, PenCom is the sole regulator for all pension funds they are required to be managed and administered by private owned and licensed PFAs selected by each employee, while the PFA appoints the PFC to be in charge and responsible for the assets as a third party. PenCom also issue guidelines for the investment of pension fund. Each employee is to receive pension for life for which he/she contributed for under CPS.

Based on the foregoing, the researcher is to study the challenges and problems of Nigerian contributory pension scheme to Nigeria Civil Servants.