1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY The greatest challenge
to government worldwide remains the issue relating to pension fund
management. A financial analyst called Alexandra Forbes argues “Pension
Management, world over, has become an increasingly great concern to most
government and countries of the world”. And coming to Nigeria, the
country was guided by a number of pension regimes prior to the
promulgation of the pension Act 2004, pension schemes in Nigeria had
been bedeviled with many pitfalls. The public service operated an
unfounded defined benefit schemes and the payment of retirement benefits
were budgeted annually. The annual budgetary allocation for pension was
often one of the most vulnerable items in budget implementation in even
where budgetary provisions were made, inadequate and untimely release
of fund resulted in delays and accumulation of arrears of payment of
pension rights. It is then obvious that, the defined benefit scheme
could not be sustained. In the private sector on the other hand, many
employees were not covered by the pension scheme put in place by their
employers and many other schemes were not funded. Besides, where the
schemes were funded, the management of the pension funds was full of
malpractices between the fund management and the trustees of the pension
board. The scenario agitated a re-think of pension administration in
Nigeria by the then President Olusegun Obasanjo`s administration,
accordingly, the administration initiated a pension reform in order to
address, eliminate and eradicate the problems associated with pension
reform act 2004. Good times come and go, retirement is definite, and the
question therefore is “Can people still live a good life after
retirement”? The non-implementation of budgeted income to pensioners, a
non-effective strategy for pension administration is seemingly a growing
problem in Nigerian economy. Some retirees are forced to continue to
work throughout their life not out of choice but for lack of means of
sustenance at old age. They are therefore forced to go in search of
menial jobs to make ends meet, since they are not even sure of getting
their pensions.
Apart from the stress associated with working at old age, how
relevant can an individual be at age 70 or 80 in the face of ever
changing knowledge brought about by advancement in technology? Besides,
of what use is life without rest at old age? Even where one is willing
and able to continue working, the opportunity for the elderly to
continue working is declining. However, it is against this backgrounds
that the researcher wishes to develop effective strategy for pension
administration in the Nigeria public sector.
1.2 STATEMENT OF THE PROBLEM First comes the layoffs
then pay cuts finally a delay in the payments of benefits due to poor
policy formulation and implementation, incorrect record keeping and
inadequate accountability of public funds. The non-implementation of
budgeted income to pensioners, delay in the payment
and denial of pension accrued to pensioners leading to pensioners
protesting over non-payment of pensions and non-compliance with ethics
of public financial management.
1.3 OBJECTIVES OF THE STUDY The aims and objectives
of the study are to ;- 1. To proffer solutions to the problem that
brings about a non-effective and efficient management in pension
administration. 2. To identify measures and steps dealing with the
issues of poor implementation of budgeted income to pensioners. 3. To
examine the quality of personnel in various pension boards.
4. To ascertain whether the administration of pension funds are done judiciously.
1.4 TEST OF HYPOTHESIS For the purpose of the study,
the following hypothesis were put forward;- 1. Ho : Non-effective and
efficient management cannot be compared to poor pension administration.
2. Hi : Non-effective and efficient management can be compared to poor
pension administration. Ho : The budgeted income to pension are not
implemented as at when due.
Hi : The budgeted income are implemented as at when due
1.5 RESEARCH QUESTIONS 1. Can people still live a
good life after retirement? 2. Why poor policy formation and
implementation of pension benefits? 3. Does incorrect record keeping and
inadequate accountability of public funds case delay pension benefits?
4. Does non-implementation of budgeted income to pensioner leading to
pensioners protesting over non-payment of pension?
5. Does non-compliance with ethics of public financial management cause problem of pension?
1.6 SIGNIFICANCE OF THE STUDY Holistic change is
required in order to create a framework that will enable consumers have a
greater financial security at old age. This study signifies a whole
lot; it is intended to find out the intrinsic and extrinsic cause of
poor pension administration. The findings will hopefully: 1. Assist the
researcher that although simple in nature will a. Effect radical
improvements in the administration of pension funds b. Deliver
significant benefits to all consumers when they retire. 2. Serve as a
guide to public official in charge of this administration of pension
funds to pensioners. 3. Assist the governments in setting priorities
according to their social fiscal policies. 4. Enable providers of
pension, plans quickly to improve the flexibility and appropriateness of
today`s product.
However, it is the researcher`s belief that greater attention to
ethical and social responsibilities will improve the way pension funds
are managed and ministered.
1.7 SCOPE OF THE STUDY This project work is
concerned with an effective strategy for pension administration in
Nigeria public sector. The work will be limited with pension commission
(PENCOM) and with other relevant areas such as pension scheme for civil
servants, pension governance, Nigeria Social Insurance Trust Fund,
Contributory pension scheme.
1.8 LIMITATIONS OF THE STUDY
1. Developing effective strategy for pension administration in the
Nigeria public sector (a study of pension commission) has not been an
easy task due to inaccessibility to some relevant materials most
managers of government prostrate perceived this research work as adding
their companies thereby withholding vital information. Consequently,
some staff of the pension bodies was reluctant to discuss the subject
freely. 2. Time factor is also another problem, which affected the
compilation of this work, despite the high scheme in the school; period
allocated for the project work must be strictly worked towards.
3. The incessant bombing in the country thereby posing everybody a prime suspect also was one of the limitations.
1.9 DEFINITION OF TERM
1. PENSION: is a fixed sum paid regularly to a person, typically
given retirement from service. 2. PENSION FUND: is any plan,fund or
scheme which provides retirement income. Pension should not be confused
with severance pay; the former is made in regular installments while the
later is paid in one lump sum. 3. RETIREE: is one who has retired from
active working life. Retirees receive pension. 4. GRATUITY: is money
given to an employee in return for service(s) at retirement. 5. LUMP
SUM: is a single payment for a number of separate items, money paid in
full rather than in several smaller amounts. 6. ANNUITY: is any
terminating stream of fixed payments over a specified period of time. 7.
PENSION ADMINISTRATION: is the management of pension funds and fairs.
8. PRE-REQUISITE: is a thing required as a condition for some other
things to happen or exist.
9. PUBLIC SECTOR: is the part of an economy concerned with providing
basic government services. These include services such as Police,
Hospitals, Schools, Military and Public transport.