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.
CHAPTER ONE
1.0 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 1st 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). Apart 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.
1.2 STATEMENT OF PROBLEMS
Nigerian Contributory Pension Scheme is
to enable the contributors like Nigerian Civil Servant, Public Servants,
Private Employee and Voluntary Contributors to enjoy retirement benefit
at their old age, not withstanding this importance, the contributory
pension scheme is faced with a lot of challenges and problems. When the
issue of pay-as-you-go (P.A.Y.G) scheme was involved it became
unsustainable due to lack of adequate and untimely budgetary provisions
and increases in salaries and pensions. There were lack of effective
regulation and supervision of the system, no prompt payment of the
contribution due to salaries not paid on time or arrears of salaries
owned. It was poorly funded or unfunded, owing to inadequate budget
allocations.
The administration was generally weak,
inefficient and non transparent improper investment and management of
pension funds created problems of liabilities pension scheme in Nigeria
were largely unregulated, without any standard or supervision and highly
diversified.
In 2004 the Pension Reform Act (PRA) went
into solving the above problems and challenges. They inherited the debt
owed or arrears of pension, they were faced with issue of ghost
pensionnaires and no accurate data base on pensionnaires. The cost of
information technology as regard the materials and other items required
to meet their promise of timelessness in prompt payment of pension, as
and when due with date. What about workers/employee who changed from
their previous work to a new one and those that decided to move from one
pension administrator to another? Moreover, there are issues of risk
management as regard investment of funds collected from the
contributors. The rules, regulations and supervision of the system were
ineffectively implemented. It is against this problems and challenges of
Nigeria contributory pension scheme to Nigeria Civil Servant that the
researcher wished to carryout the research work.
1.3 OBJECTIVE OF THE STUDY
The study will examine the problem and
challenges of Nigeria contributory pension scheme to Nigeria Civil
Servants. Thus, the study is set out to achieve the following
objectives:
- To know if the pensionnaires on regular bases receive their retirement benefits as and when due with date.
- To find out if the debt or arrears of pensionnaires inherited by PenCom has been cleared.
- To know if the issue of ghost pensionnaires has been nailed to bud.
- To determine the effect of change of job and pension administrator in the pension scheme
- To know if proper supervision and implementation to the set of rules, regulations and standards for administration are maintained.
1.4 RESEARCH QUESTION
The research is set out to answer the following questions:
- Do pensionnaires receive their retirement benefits regularly as and when due (monthly basis) in Nigeria?
- What is the position of debt/arrears of pensionnaires inherited by PenCom in the contributory pension scheme in Nigeria?
- Do we still have ghost pensionnaires in the contributory pension scheme in Nigeria?
- What effect do change of jobs and pension administers have on the contributory pension scheme in Nigeria?
- What is the impact of improper supervision and implementation to the set of rules, regulations and standards for administration are maintained?
1.5 RESEARCH HYPOTHESIS
The research will be guided by the following hypothesis:
H0: The debt or arrears of pension
inherited by PenCom do not serve as a challenge and problem to Nigeria
Contributory Pensions Scheme to Nigeria civil Servants.
H1: The debt arrears of pension inherited
by PenCom serve as a challenge and problem of Nigeria Contributory
pension Scheme to Nigeria civil Servants.
H0: Change of jobs and pension
administrator do not serve as a challenge and problems of Nigeria
Contributory Pension Scheme to Nigeria civil Servants.
H1: Change of job and pension
administrators serves as a challenge and problem of Nigeria Contributory
Pension Scheme to Nigeria Civil Servant.
H0: Ghost pensionnaires do not serve as problem and challenges of Nigeria Contributory Pension Scheme to Nigeria Civil Servants.
H1: Ghost pensionnaires serve as a problem and challenge of Nigeria contributory pension scheme to Nigeria Civil Servants.
1.6 SCOPE AND LIMITATION OF THE STUDY
The scope of this study is centered on
challenges and problem of Nigeria Contributory Pension Scheme to Nigeria
Civil Servants. It will be viewed from some pension administrators,
ministry and forms and shall cover Enugu metropolis as a source of
information to enable the researcher carryout his project work.
It is necessary to mention that the
researcher was beset with many problems in the course of this work.
There was dearth of data to divulge some of the questions which were not
answered, due to uncooperative attitude of some workers in the selected
areas. Most often information was not revealed by the
administrators/institutions due to reasons best know to them as
confidential and restricted areas. The researcher believed that those
problems may affect the result of this work. Apart from the
aforementioned all other errors and omissions are precisely those of the
researcher.
1.7 SIGNIFICANCE OF THE STUDY
The research is systematically meant to
be practical and educative in the sense that it is going to assist in
exposing some of the challenges and problems of Nigeria contributory
pension scheme to Nigeria Civil Servants.
Essentially, this work is a step in a
right direction to assist and enlighten the general public on the
challenges and problems of Nigeria contributory pension scheme to
Nigeria civil servant.
Furthermore, there is a need to provide a
reference document for further investigation and evaluation of
challenges and problems of PenCom to Nigeria Civil Servant. This
research work will go a long way to increase the availability of
literature in field of finance.
Finally, the study is aimed at been
beneficial to policy maker, regulators, public and private employees and
employers, voluntary contributors, general public, Enugu State, the
federal Government and administrators of pensions.
1.8 DEFINITION OF TERMS
NPF National Provident Fund was
established in 1961 for non pensionable private sector employee. It was
saving schemes were employee and employer contribute on monthly based.
NSTIF The Nigeria Social Insurance Trust
Fund was established by decree No. 73 of 1993 to provide enhanced social
protection to private sector employees PRA Pension Reform Act 2004 is
the most recent legislation of the Federal Government at reforming the
pension system. It establish a Uniform pension System a single authority
regulate all pension matters. SEC Securities and exchange commission is
a licensed pension fund managers. JTB Joint Tax Board approved and
monitored all private pension schemes with enabling powers from schedule
3 of the personal Income Tax Decree 104 of 1993.
NAICOM National Insurance Commission, an
agency responsible for licensing and regulating insurance companies in
the country. CPS Contributory Pension Scheme: it is a marked departure
from pay-as-you-go Defined Benefit (DB). It is schemes that improve the
pension situation in both the private and public sectors by making full
funding of the scheme compulsory.
PFA Pension Fund Administrator is limited
liability companies duly licensed by PenCom as special purpose vehicle
to carryout pension business only. PFC Pension Fund Commission provides
strict and adequate supervision of the industry. RSA Retirement Saving
Account: This were monthly pension contributions are kept PENCOM The
National Pension Commission: was established to regulate, supervise and
ensure the effective administration of pension matters in Nigeria.
REQUEST FOR PROJECT MATERIAL
Good Day Sir/Ma,
WARNINGS!
PLEASE make
sure your project topic or related topic is found on this website and
that you have preview the abstract or chapter one before making payment.
Thanks for your interest in the research
topic. The complete research work will cost you N2000 and we will send
the material to you within 24hours after confirming your payment.
Make the payment of N2000 into any of the account
number below and we will send the complete material to you within
24hours after confirming your payment.
Account Name: Agada Leonard E
Account No: 2070537235
Bank: UBA
Or
Account Name: Agada Leonard E
Account No: 3049262877
Bank: First Bank
Or
Account Name: Agada Leonard
Account No: 0081241151
Bank: Diamond Bank
After payment, send the following information to us through this email
address: enemsly@gmail.com
Topic paid for:
Amount Paid:
Date of Payment:
Teller No or Transaction ID:
Name of Depositor:
Depositor Phone Number:
Email address:
NOTE: The material will be forwarded to the email address you provided
within 24hrs after confirmation of the payment.
Thanks.
Agada Leonard E.
For: Enems Project.
For more information visit our contact page @ CONTACT US
No comments:
Post a Comment