The Management of Pension Scheme in Nigeria (Problems and Prospects)
Chapter One
OBJECTIVE OF THE STUDY
The study will examine management of pension scheme in Nigeria; challenges and prospects. Thus the study is set out to achieve the following objective.
- To identify the challenges and prospects of management of pension scheme in Nigeria.
- To ascertain if management of pension scheme have enlarged the amount contributed through contributory scheme in Nigeria.
- To evaluate and see if there are any prospect in management of pension scheme assets investment portfolio in Nigeria.
- To know whether the new biometric system has contributed to check fraud and enhance management of pension scheme in Nigeria.
- To find out whether investment of pension scheme has an input in FGN bond capital market in Nigeria.
- To advice management of pension scheme in Nigeria on the strategies to improve pension scheme management.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
CONCEPTS AND MEANING OF PENSION SCHEME
The pension scheme exist to provide post retirement benefits to employees. Pension scheme was introduced into Nigeria during colonial era to provide old age. British citizens income and security upon retirement from active service. Nigeria first ever legislative instrument on pension matter was the pension ordinance of 1951, which had retrospective effect from 1st Jan. 1946. The National Provident Fund (NPF) scheme established in 1961 to address pension matters for private organization followed by Act No. 102 and Armed forces pension Act 103 in 1979. The police and other government agencies pension scheme was enacted under pension Act No. 75 of 1987, followed by Local Pension edict which culminated into establishment of Local Government Staff Pension Board, of 1987.
In the view of Adesina (2006:7), the primary goals of pension system should be to provide adequate, affordable, sustainable and robust retirement income, while seeking to implement welfare improving scheme in manner appropriate to individual country. Adequate system of pension scheme provide benefits that are sufficient to prevent old age poverty on a country specific absolute level in addition to providing a reliable means to smooth life time consumption for vast majority of the population, while according to Robalino, D. (2005:120) pension scheme should be affordable system in any country, with the financing capacity of individuals and society does not unduly displace other social or economic imperatives or have untenable fiscal consequences. He argued that affordable and sustainable system of pension is one that is financially sound and can be maintained over a foreseeable horizon under a broad set of reasonable assumptions.
The design of a pension scheme system or its reforms must explicitly recognize that pension benefits are claims against future economic output (Robert, 2005:112). He further suggested that to fulfil their primary goals, pension systems must contribute to future economic output. Reforms should, therefore be designed and implemented in a manner that supports growth and development and diminishes possible distortions in capital and labour markets. Mean while the corporative vision and mission statement of National Pension
Commission according to the Annual Report (2010:1) corporate vision is “To be a world-class organization that ensures the prompt payment of retirement benefits and promotes sustainable pension industry that positively impact on the economic development of Nigeria”. The mission statement is “To be an effective regulator and supervisor that ensures the safety of pension assets and fair return on investment utilizing appropriate technology with highly skilled and motivated staff?
Pension scheme therefore is a fund saved while on active service or working which will yield or mahire at old age on retirement from active service for adequate and sustainable health.
TYPES OF PENSION SCHEME
According to Adesina, (2006:8) pension scheme options are broadly divided into two types as follows: a)Parametric pension reform
b)Systematic pension reform
CHAPTER THREE
RESEARCH METHODOLOGY
RESEARCH DESIGN
This chapter will be concerned on the methodology used by the researcher in planning her research work. Research design is the procedures used by researcher in collecting data for the research study (Okeke, 2005:65). As for Nwana 1981:51) is a term used to describe a number of decision which need be taken regarding the collection of data before ever the data are collected.
The researcher employ the survey method, macro economic variables and historical research design were adopted for this study. The choice of these two methods of research design was informed by the fact that extensive use was made of recorded data, while survey research approach was employed to get information from different categories of respondents.
The research design and methodology in this chapter will cover the following areas: area of the study, population of the study, the sample techniques, instrument of data collection and method of data analysis, validation and reliability of the instrument.
SOURCES OF DATA
Data used in this study came mainly from two sources; primary and secondary sources. Primary data are those first hand information sourced purposely for the work at hand. According to Tittus C. (2010:184) primary data are those collected by the researcher himself for the specific work at hand. Secondary data are those that are already in existence either recorded or published manner and comprehensive review of related literature to the subject.
AREA OF THE STUDY
The area of the study will cover National Pension Commission (PenCom) and some selected Pension scheme Administration (PFA), with the role of financial institutions in managing the assets of the contributed fund by the employees/workers in Enugu State.
POPULATION OF THE STUDY
The population of the study was from contributions of pension scheme, cross domestic product, total amount of assets investment portfolio, trained staff and retirement saving account registration from National Pension Commission Annual Report for various years. The population drawn from the aggregate employees in pension industry is put to 105 (one hundred and five).
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA
PRESENTATION OF DATA
In order to ensure thorough comprehension of this work, the various data collected for this study were analysed sequentially to the stated hypothesis. The questionnaire shown in appendix B are designed for employees and management staff in National Pension Commission (PenCom) and Pension scheme Administrators office in Enugu State of Nigeria.
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
SUMMARY OF FINDINGS
In these chapter, the findings arising from the data obtained from both primary and secondary sources in the course of this research work are summarized as follows:
The challenges and prospect in management of pension scheme in Nigeria are
- Policy implementation; though has been one of the major challenge there has been prospect and improvement on supervision and regulation of the policy.
- Arrears of pension; there are prospect hence most of the arrears has been settled.
- Contribution of pension scheme; the new act of 2004 allowed both private and public employees to participate and this brought improvement, growth and prospect in the management of pension scheme industry.
- In assessing management performance on assets investment they were rated good.
- Use of biometric system has encouraged staff training, fraud detecting, and accurate debt of arrears to pension scheme encourage, growth and prospects to the capital market.
- The strategy to be adopted so as to improve management of pension scheme in Nigeria.
a) School/institution for pension should be established.
b) Pension should be taught in various school in Nigeria.
c) More seminars and workshop should be organized.
d) Proper verification exercise should be conducted.
e) Prompt and regular payment system of pensioner should be adopted.
f) Compliance issue should be addressed.
CONCLUSION
The study is directed at examining the challenges and prospect of management of pension scheme in Nigeria. These challenges which has been identify as contribution, non availability of records/data, inadequate funding, use of biometric system, incompetent and inexperience of pension
staff, uncoordinated administration, perpetual fraudulent activities/irregularities, improper investment of asset fund in a good portfolio, and unimproved bond capital market has witness some improvement and prospect in them. These were presented in the research.
The research show that most of this challenges has been from time immeorial but drastic improvement and prospect are witnessed. Management has to speedy up in some areas were they are lacking behind especially on prompt and regular payment of pension. Education as we know is a bedrock of every society but experience are highly needed with good ethics and moral mind to handle issue concerning old people and there funds. No organization in the world can do without finance and fund. Therefore management should adopt the strategy that will move the organization forward and bring life to it.
RECOMMENDATION
Base on the finding and conclusion, the following recommendation are hereby made:
- Ethnics and moral standard should be built.
- Training and retaining of staff and management of pension scheme in Nigeria should be adopted.
- More local and foreign seminars, and workshop should be conducted regularly to sensitize both workers, staff, management and pensioners.
- An institute/school of pension scheme school be established to carry out most of the enlightenment function these to reduce cost of running training programmes.
- Prompt and regular payment of pension should be adopted and practised.
- Ghost pensioners should be identified and wiped out.
- Adequate investment of asset fund portfolio of pension scheme should be maintained.
SUGGESTION FOR FURTHER STUDIES
From the findings of these study, conclusion drawn from it and the recommendation proposed so far, the following suggestion are made for area of further studies.
The scope of this study was limited to the challenges and prospect of pension scheme management in Nigeria. It would be a greater interest to extend the research to discover the Biometric system of data a means of safeguarding management of pension scheme in Nigeria. Lack of implementation of policies causes an effect on pension scheme management.
The impact of inadequate record/data keeping on management of pension scheme.
Finally, greater work is equally needed to introduced and established the benefits of pension scheme institute in the management of pension scheme in Nigeria.
BIBLIOGRAPHY
Textbooks
- Abromovitz, L. (2003), Protecting and Rebuilding Your Retirement. New York: AMACOM USA.
- Casey, B. (2008), Pension Reform in Nigeria, How not to Learn from Others? Lagos, Global Social Policy in Nigeria.
- Federal Republic of Nigeria (2004), Pension Reform Act, Abuja, National Pension Commission.
- Holzman, R. (2005), Old Age Income Support in 21st Century: An International Perspective on Pension Systems and Reforms. Washington DC, The World bank.
- National Pension Commission (2010), Pension Contribution. Abuja, National Pension Commission.
- Nwanna, O.C. (1981), Introduction to Educational Research, Ibadan, Hernman.
- Okeke, T.C. (2005), Research Methods: A Guide to Success in Project Writing, Bauchi, Multi-system Publishing Company Limited. Okotone, O.A. (2005), Management of Pension Scheme in the Public Sector in Nigeria, Ibadan, Polygraphic Nigeria Ltd.
- Titus, C. (2010), Research Methods in Business and Management Sciences. Enugu; Immaculate Publication Limited. The Nigeria Pension Reform Act (2004), National Pension Commission (PenCom) of the Federal Republic of Nigeria.