Introduction
1.1 Background of the study
The purpose of occupational pension scheme is to provide employees regular and stable income after their retirement from service. It is an arrangement an employer or a group of employers use(s) to provide pension (and sometimes other) benefits for their employees when they leave or retire. They also provide benefits to the employee’s dependant if the employee dies. This scheme is usually funded by contributions from just the employer, or from both the employer and the employee. A good pension scheme does not only serve as an incentive to employees but helps to attract and retain experienced staff. The first pension legislation in Nigeria was enacted in 1951 by the British colonial administration, referred to as the Pension Ordinance, with retrospective effect from 1st January, 1946. The pension which was initially designed for colonial officers who were moved from post to post in the vast British Empire was to ensure their continuity of service wherever and whenever they were deployed to serve the colonial administration. When the law eventually became applicable to Nigerians, the application was at the discretion of the Governor − General. Pension was therefore not a right for Nigerians under the Ordinance. To redress this, a new Pensions Act was enacted in 1979 referred to as the Pensions Act No. 102 of 1979; retroactively effective from 1st April, 1974. The Act consolidated all enactments on pensions and incorporated pensions and gratuity scales designed for public officers by the Udoji Public Service Review Commission in 1974. It also became the basic pension law from which other pensions laws in Nigeria emerged. These laws include:
- Armed Forces Pensions Act No. 103 of 1979. The Act consolidated all enactments dealing with pension benefits and gratuity scales for the Armed Forces.
- Pension Rights of Judges Decree No. 5 of 1985.
- Amendment Acts Nos. 51 of 1988; 29 of 1991; and 62 of 1991.
- The New Pension Reform Act 2004 (Federal Republic of Nigeria Official Gazette No. 60 Lagos − 30th June 2004 Vol.91)
Apart from Pensions Acts, various circulars guiding the administration and regulations of pensions in the public service are issued from time to time to update previous ones. The Pension Reform Act (PRA) of 2004 changed the standard pension model in Nigeria from defined benefit schemes to defined contribution schemes. The need to have long-term savings amongst employees for retirement and to establish a unique set of regulations for both the private and public sector employees were among the basic objective of the reforms. Notably, since inception, the pension industry has accumulated assets of $25bn (Leriba, 2014). As at October 2014 the National Pension Commission (PenCom), says that the country’s pension assets have hit N4.6 trillion (News Agency of Nigeria [NAN], 2014). While as at October 2015 a report quoting the Director-General (DG) of PenCom Mrs. Chinelo Anohu-Amazu posits that the Contributory Pension Scheme (CPS) which kick-started in 2004 has now hit over N5trillion [$27bn] (Iloani, 2015). Under the pension scheme, employees are obliged regulatory to maintain a Retirement Savings Account (RSA) with their chosen pension fund administrator (PFA) into which contributions from both the employee and employer are deposited Furthermore, the recent 2014 Pension Act, section (4) (1) stipulates that the rates as pertaining the monthly emolument shall be a minimum of 10% by the employer and a minimum of 8% by the employee. Subsection (2) stipulates that upon agreement between the two parties, the rate can be revised upwards, from time to time, and the Commission shall be notified of such revision. Interestingly, there has been considerable progress in the membership and contributions to the pension schemes. The total scheme membership has increased by 17% between September 2011 and September 2013(Barungi, 2014). Additionally, there has been an upturn in the private and public sector contributions by 7.15% over the same period (Leriba, 2014). With a growth rate of 30% over the last four years, total pension contributions are estimated to hit $100bn by 2020 according to the African Development Bank [AfDB] (Barungi, 2014). Though such projection has a healthy implication, however, the foremost issue is that in the light of the huge funds invested in retirement savings, there are growing concerns that there are few channels to deploy this money to the benefit of the real economy of Nigeria. Regulatory restrictions and investing limits are May inhibiting further growth potential and competitiveness in the pensions’ industry. However, there may be attractive opportunities emanating from the regulations and also from the limited channels to deploy the pension funds. These have compelled the need to examine the regulatory opportunities for investors on the investment of pension funds in Nigeria
1.2 Statement Of The Problem
The management of pension scheme in Nigeria is inundated by multiple and diverse problems. One key problem is the lack of adequate funding. Government parastatals and institutions have not succeeded in setting aside the recommended amount for pension scheme from the total emolument of their employees for lack of funds. Another dimension of the problem is that, retirees find it difficult to collect their pension gratuity as at when due after retirement. In view of the above, this research work seeks to evaluate pension record in Nigeria the past, present and the future.
1.3 Objective Of The Study
The objectives of the study are;
- To ascertain the impact of pension record past, present and future to pensioners
- To ascertain if the management staff of pension fund administrators are well trained and qualified to manage pension fund in Nigeria.
- To ascertain the extent to which the new pension contributory scheme meets the expectation of the retirees.
- To ascertain the extent of efficiency in record keeping by pension fund administrators in Nigeria
1.4 Research Hypotheses
For the successful completion of the study, the following research hypotheses were formulated by the researcher;
- H0: There is no impact of pension record past, present and future to pensioners.
H1: There is impact of pension record of past, present and future to pensioners - H02: The management staffs of pension fund administrators are not well trained and qualified to manage pension fund in Nigeria
- H2: The management staffs of pension fund administrators are well trained and qualified to manage pension fund in Nigeria
1.5 Significance Of The Study
This work shall be of great benefit to the National Pension Commission as it will enable the Commission to review and update it existing guidelines on payment of retirees benefits and gratuity after retirement from active service. Pension fund administrators in Nigeria will also find this report dispensable as the report will enhance efficiency in the operation of pension fund administration in Nigeria. Other researchers will find the work useful as it is a base for future research work. Finally it will also contribute positively to the field of knowledge, especially the field which this research is directed.
1.6 Scope And Limitation Of The Study
The scope of the study covers pension record in Nigeria the past, present and the future. The researcher encounters some constrain which limited the scope of the study;
a) Availability Of Research Material:
The research material available to the researcher is insufficient, thereby limiting the study
b) Time:
The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
c) Organizational privacy:
Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities
1.7 Definition Of Terms
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
Past:
The past is a term used to indicate the totality of events that occurred before a given point in time. The past is contrasted with and defined by the present and the future
Present:
The present is the time that is associated with the events perceived directly and in the first time, not as a recollection or a speculation.
Future:
A period of time following the moment of speaking or writing; time regarded as still to come.
Pensioner:
A pensioner is a person who collects a pension, most commonly because of retirement from the workforce. This is a term typically used in the United Kingdom (along with OAP), Ireland and Australia where someone of pensionable age
1.8 Organization Of The Study
This research work is organized in five chapters, for easy understanding, as follows
- Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
- Chapter two highlights theoretical framework on which the study is based, thus the review of related literature.
- Chapter three deals on the research design and methodology adopted in the study.
- Chapter four concentrate on the data collection and analysis and presentation of finding.
- Chapter five gives summary, conclusion, and recommendations made of the study
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