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Effect of Additional Voluntary Contribution on Pension Income at Retirement

Effect of Additional Voluntary Contribution on Pension Income at Retirement

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Reference ID: PS-24876-TM

DEDICATION

This research work titled "Effect of Additional Voluntary Contribution on Pension Income at Retirement" is dedicated to God for his enabling grace and to all computer enthusiasts who help to make life a pleasant experience.

ACKNOWLEDGEMENT

I owe my indebtedness to my Supervisor (Name of your Supervisor), the Head of Department (Name of your HOD), the Lecturers in the department of Public Administration (PA), Book Authors and Profound Scholars of existing/related research material for your moral support that facilitated the successful completion of my (Tertiary Institution level). I am grateful to God Almighty and my parent for their financial support in my career. I really appreciate you all for everything, Thank you very much.

TABLE OF CONTENTS

PRELIMINARY PAGES


CHAPTER ONE

INTRODUCTION


CHAPTER TWO

LITERATURE REVIEW

  • 2.1 Introduction
  • 2.2 Conceptual Review
  • 2.3 Theoretical Framework
  • 2.4 Empirical Studies

CHAPTER THREE

RESEARCH METHODOLOGY

  • 3.1 Introduction
  • 3.2 Research Design
  • 3.3 Population of Study
  • 3.4 Sampling and Sampling Technique
  • 3.5 Validation of Research Instrument
  • 3.6 Method of Data Collection
  • 3.7 Method of Data Analysis
  • 3.8 Questionnaire Administration
  • 3.9 Ethical Consideration
  • 3.10 Statistical Analysis

CHAPTER FOUR

DATA ANALYSIS, RESULT AND DISCUSSION

  • 4.1 Introduction
  • 4.2 Presentation and Analysis of Data
  • 4.3 Re-statement of Research Questions
  • 4.4 Test of Hypotheses
  • 4.5 Discussion of Findings

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

  • 5.1 Introduction
  • 5.2 Summary of Findings
  • 5.3 Conclusion
  • 5.4 Recommendation
  • 5.5 Suggestion for Further Study

REFERENCES

APPENDIX A - “QUESTIONNAIRE”


Effect of Additional Voluntary Contribution on Pension Income at Retirement

CHAPTER ONE

1.1 Introduction

Retirement is a phase of life that every employee must reach whether prepared for or not. It is the point in time when an employee chooses to leave his or her employment permanently (which could be voluntary or involuntary), and generally coincides with the employee’s eligibility to collect retirement resources ranging from social security to company pensions, etc. It is an inevitable stage in someone’s life be it in the private or public service, it is a period in time whereby one’s effort in an organization and role as a paid worker ceases, (Agoro, 2009; Ahmed, 2007; Bassey & Asinya, 2008).

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.


1.2 Background of Study

Retirement is a time of significant transition as far as the use of time is concerned. However, the importance of retirement is made more glaring by the fact that the retired person is made to face some challenges because of his/her new status (as a retired person). It has been noted that retirement is a stressful experience to many because of its associated life decision change in the matter of life arrangement generally. During retirement, a retiree public officer usually receives certain benefits in the form of gratuity and pension. Gratuity is the sum total lump paid to a worker on existing from the service either through withdrawal or retirement, while pension is the sum of annuity paid periodically, usually monthly to a public servant who disengages from service after attaining a specified age limit usually 60 years or 35 years of active service, (Ezeani, 2001; Ebosele, 2001).

In other words, gratuity and pension are post-employment benefits. These benefits are designed to prevent a sudden sharp drop in the financial capacity and living standard of the worker as would happen with the stoppage of his monthly salary and allowances after disengagement. The lump sum or gratuity he is paid is meant to enable the retiree finance any post-retirement endeavor of his choice while the pension replaces the monthly salary the retiree gets while he was still in active serve, (Babasola, 2000). In this way, the retiree having spent a substantial part of his productive life working to earn a living, can in his old age (that is, at retirement) sustain and maintain a standard of living comparable to what he was used to while in active service. It is based on this that most progressive government enact laws to back up their policies on employment, retirement and pension in both the public and private sectors of the economy. To Casey (2011) and Taiwo (2014), pensions as a form of social security against old-age poverty and other uncertainties have attracted great interest virtually everywhere in the world, both in developed, developing and under-developed countries.

This can be as a result of ill health, age or statutorily completing the number of years. With the reform of the civil service decree No. 43 of 1988, retirement age has been put at 60 years or 35 years in service. Whichever comes first, there arises the need to carefully and adequately manage these categories of workers who had given most of their life, time and efforts to the actualization of organizational growth and its development. Thus, it presents a worse situation when the retiree is not adequately prepared to face this ultimate phase of life. This among others have necessitated the need for a pension administration in order to cater for future responsibilities of these categories of workers and to enable them have a similar and reasonable standard of living prior to what obtains while they were in active service. In most developing countries with Nigeria particularly, government restrict working age of public civil servants to prevent an ageing labor force and allowing entrants of young able-bodied labour for increasing efficiency and productivity, (Federal Republic of Nigeria Official Gazette, 2004). This is important because as an employee becomes older, his Marginal Physical Productivity of Labour (MPPL) will decline, thus retaining such an employee in the service of the organization will lead to running an organization at a loss. Hence, why the statutory working age in the public service is fixed at sixty (60) years or thirty-five (35) years of unbroken active working service before retirement, but the Retirement Age Harmonization Act of 2012 stamps the retirement age of judicial officers and academic staff of tertiary institutions at 70 and 65years respectively because of the belief that “the older, the wiser” (Maji, 2014).

Pension programs, especially those that are publicly financed and administered, have become an issue of concern to economists, policymakers and the general public. This is not only because such programs are central to the well-being of pensioners and the elderly, but also because the majority of pension programs are not actuarially balanced (that is they are not financially stable) and as such, they are run at deficits, thus making the present values of their future liabilities to be enormous. In some countries, especially those that are economically advanced, pensions are usually extended to other categories of people apart from retirees, such as widows, orphans, disabled people (in the form of disability pensions), and the elderly or the aged.

Therefore, in Nigeria where the research was carried out, the activities that was conducted is to assess the Effect of Additional Voluntary Contribution on Pension Income at Retirement.


1.3 Statement of Problems

Investigation revealed the major problem of the pension fund administration in Nigeria was the non-payment or delay in the payment of pension and gratuity by the Federal and State governments. For instance, the pension backlog was put at about N2.56 trillion as at December, 2005. In fact, pension fund administration became a thorny issue with millions of retired Nigerian workers living in abject poverty and they were often neglected and not properly cater for after retirement (Orifowomo, 2006). Sadly, retirees went through tough times and rigorous processes before they were eventually paid their pensions, gratuity and other retirement benefits. At one time the money to pay their benefits is not available; and at another time, the Pension Fund Administrators were not there to meet the retirees’ needs.

Basically, the old scheme has been beset with a lot of challenges and problems. Besides the aforementioned; other problems were: demographic challenges and funding of outstanding pensions and gratuities, merging of service for the purpose of computing retirement benefits. These problems coupled with the administrative bottlenecks, bureaucracies, corrupt tendencies and inefficiencies of the civil service, and the economic downturn have resulted in erratic and the non-payment of terminal benefits as at when due (Orifowomo, 2006; Ezeala, 2007, Abade, 2004).


1.4 Aim and Objectives of Study

The aim of the study is to assess the Effect of Additional Voluntary Contribution on Pension Income at Retirement. In achieving this aim, the following specific objectives were laid out as follows:

  1. To find out the factors inhibiting the additional voluntary contribution on pension income at retirement
  2. To find out the effect of retirement benefit on the socio economic lifestyle of retirees in Lagos state
  3. To investigate the problem associated with the retirement benefit administration in Lagos
  4. To proffer solution to the problems of retirement pension income collection in Lagos State

1.5 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

  • Are there factors inhibiting the additional voluntary contribution on pension income at retirement?
  • Are there problems associated with the retirement benefit administration in Lagos?
  • What is the effect of retirement benefit on the socio economic lifestyle of retirees in Lagos State?
  • What solution can be proffered to the problems of retirement pension income collection in Lagos State?

1.6 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

  • H0: There are no significant factors inhibiting the additional voluntary contribution on pension income at retirement
  • H1: There are significant factors inhibiting the additional voluntary contribution on pension income at retirement

Hypothesis Two

  • H0: There are no significant problems associated with the retirement benefit administration in Lagos State
  • H1: There are significant problems associated with the retirement benefit administration in Lagos State

1.7 Significance of Study

The study could be of benefit to civil servants in Nigeria; it could inform them on the avoidable pitfalls of their predecessors. Besides, the knowledge from the study could trigger a more innovative, careful, and prudent lifestyle in civil servants while in service, in preparation for their post-retirement years.

Furthermore, newly employed individuals both in the public and private sectors could garner information from the findings of the study on the actual mechanisms of the current Nigerian pension scheme. This could help them begin planning for retirement and old age early in their working years.

The study could be an eye opener to government at all levels and those saddled with the task of employment, retirement and old age policy making in the country. A considerable number of Nigerians are government employees. This calls for better and informed policy making, well implemented to safeguard people in their old age. Since it is impossible not to have retirees and 8 old folks in society, planning correctly and adequately for their needs cannot be over-emphasized as part of plans towards sustainable development in the country.

Thus, the findings from the study are capable of assisting lawmakers make policies that could address the plights of and positively impact the aged and retired individuals in Nigeria. Knowledge-based policy implementation especially in reforming the contributory pension scheme to be more proactive is another crucial end the study could help achieve.


1.8 Scope of Study

The study focuses on the effect of additional voluntary contribution on pension income at retirement using Lagos State as a case Study.


1.9 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

  1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
  2. Research material: availability of research material is a major setback to the scope of the study.
  3. Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
  4. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

1.10 Definition of Terms

Agent: A representative who act on behalf of other person or organization.

Management: This is the acting management handling, directing or control, it can also be looked at as skill in managing executive ability. It is also considered as the person or persons controlling and directing the affairs of an instruction or business.

Computer: This is an electronic machine operator under the control of instruction, store in its own memory unit which can accept data, process these data without human intervention, producing output from the processor and store both the data and output for future use.

Implement: To put something into effect or action.

Contract: This is form or a legally binding agreement between the parties identities in the agreement of fulfill all the terms and condition outlined in the agreement.

Design: The act of creating an objects form and functions. Design can involve making products, machines purpose and are pleasing to the eye as well.

Information: This is a data that has been processed in a useful format that will enable an individual to gain knowledge in order to make decision.

Online: An activated and read for operation, that is capable or communicating with or being controlled by a computer. “An outlining database.

Software: Computer software and program instruction that control and coordinated the activities of the computer hardware and direct the processing of data.

System: A system is said to be a group of things or a set of components, ideas, theories procedures etc working together for which a particular or specific objective can be acquired.

Pension: A pension is a fund into which a sum of money is added during an employee's employment years, and from which payments are drawn to support the person's retirement from work in the form of periodic payments

Pensioneer: This is an individual who receives a pension, especially the retirement pension

CHAPTER TWO

2.0 Literature Review

2.1 Introduction

This chapter focuses on the review of related literature. A literature review includes the current knowledge as well as theoretical and methodological contributions to a particular topic. It documents the state of the art with respect to the topic you are writing. It surveys the literature in the topic selected. In this research work the literature review includes the …

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