Building Sustainable Pension Scheme for the Private Sector in Nigeria; Challenges and Prospect.
CHAPTER ONE
OBJECTIVE OF THE STUDY
The Main Objective of the study is an appraisal on Building sustainable pension scheme for the private sector in Nigeria; challenges and prospect; The specific objectives include
- To determine the relevance of pension scheme.
- To determine the strategy for Building sustainable pension scheme for the private sector in Nigeria.
- To determine the challenges and prospect of Building a sustainable pension scheme for the private sector in Nigeria;
CHAPTER TWO
REVIEWED OF RELATED LITERATURE
Conceptual Definition
Adams (2005) defines pension as the monthly money paid to a worker by the government or corporation after a specified period of employment. Ozor (2006) opined that pension comprises of a lump sum payment to an employee on a monthly basis after retirement from active service. Ayegba, James, and Odoh (2013) defined pension as a term used to denote an individual’s remittance upon retirement, typically under specified legal and contractual terms. Pension is a sum of money regularly paid to a person who no longer works because of old age, disability or retirement or to his widowed or dependent children by the state, former employers or from a provident fund to which he and his employer both contributed. Pension systems are generally grouped into Defined-Benefit (DB) and DefinedContribution (DC) pensions. The former promised retirement pension payout. Based on the final contributions and number of years of service. While the latter elicits contributions from employers and employees and benefits. The advent of pension scheme into Nigeria is credited to the colonial administration (Sunday & Ehiogu, 2014; Uzoh & Anekwe, 2018). The authors’ maintained that pension was founded on the premise that, after retirement, British citizens employed in Nigeria would be provided with old age revenue and protection. The historical development of pension and its reforms in Nigeria is documented in several studies such as Ekpulu and Bingilar (2016), Odia, and Okoye (2012). The focus in this paper is on the recent reforms; Pension Reform Act 2004 and Pension Reform Act 2014 that ushered in the contributory pension era in the Nigerian Pension landscape. All forms of pension scheme effective in Nigeria prior June 30th 2004, were defined benefit plan and are non-contributory. The new contributory pension scheme, however, came into existence because of the 2004 Pension Reform Act (PRA), which created for all public and private workers a compulsory and contributory funded pension scheme. The Act is contributory innature and is mandatory for all categories of workers in the public and private sectors. Eromonsele and Analo (2017) acknowledged the following features of the Pension Reform Act of 2004: i. Provides established rules, regulations, standards and for the management and for the payment of retirement benefits; ii. Every employee receives his or her retirement benefits; iii. Employer and employee each contribute 7.5% to the retirement fund every month; iv. Establishment of the National Pension Commission (PENCOM), which regulates the activities of Pension Fund Administrators (PFA) and Pension Fund Custodians (PFC); v. The contributions are tax- free; vi. Employees were required to open a Retirement Savings Accounts (RSA); vii. Employees can choose their own pension administrators; viii. Employees can move freely in the labour market with their funds still secured; ix. Professional pension fund administrators are to control and invest Pension Fund funds privately. x. Allows for an increase in the rates of monthly contributions, subject to agreement between the employer and the employee Dostal and Cassey (2007) acknowledged that the new contributory pension scheme operational in Nigeria is an imitation of the Chilean model. Some researchers and writers have criticized the Chilean model that it had several assumptions without producing the stated benefits (Holzmann & Hinz, 2005; World Bank, 2005). Anyim, Olusanya, and Okere (2014) identified several drawbacks of the Pension Reform Act, 2004. They include non-coverage for categories of workers, nature and rate of contribution, investment returns from pension fund and assets, pension fraud and corruption amongst others. Ibiwoye (2008) acknowledged that with the advent of the 2004 pension scheme, many employees were unaware of the workings of the pension scheme.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Introduction
It is important to ascertain that the objective of this study was to ascertain Building Sustainable Pension Scheme for the Private Sector in Nigeria; Challenges and Prospect.. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing an Building Sustainable Pension Scheme for the Private Sector in Nigeria; Challenges and Prospect.
Summary
This study was on Building Sustainable Pension Scheme for the Private Sector in Nigeria; Challenges and Prospect. Three objectives were raised which included: To determine the relevance of pension scheme, to determine the strategy for Building sustainable pension scheme for the private sector in Nigeria and to determine the challenges and prospect of Building a sustainable pension scheme for the private sector in Nigeria. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from pension scheme in Enugu state. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
However, for the sustainability of the contributory pension scheme, challenges such as exception clause, partial application of the scheme and delay in payment of pensions must be surmounted. Also, we advocate that effective risk management of the pension fund assets must be pursued. Moreover, contributory pension scheme had created investment opportunities there by bestowing the Nigerian economy.
Recommendation
Government should remove the exception clause from the new pension scheme. The scheme should apply to all public and private sector employees and pensioners.
References
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