The Role of Contributory Pension Scheme in the Economic Development of Nigeria
CHAPTER ONE
Objective of the study
The aim of this project work is to examine the role of contributory pension scheme in the economic development of Nigeria. The general objectives of this research work includes the following;
1. To examine the impact of contributory pension scheme in the economic growth of Nigeria.
2. To evaluate the contribution of the scheme (contributory pension scheme) to the welfare of pensioners in Nigeria.
3. To examine the relationship between contributory pension scheme and the development of Nigerian pension scheme.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Theoretical Framework
The theory underpinning this study is the deferred wage theory (Malaski, F. & Capelli, (1981) which views the pension plan as a method to defer some compensation until an employee retires. The employer promises to provide a pension payment in exchange for current services. The deferral of wages often results in individual tax savings. The advantages to the employer of providing a pension plan are less obvious. Under the deferred wage theory, firms offer pension plans because of economies of scale in administrative, portfolio management and other costs, (Nwanne, 2015). The employer receives cash flow benefits to the extent that the present value of deferred wages exceeds them required funding (especially as now required by employee retirement income security act (ERISA)). The deferred wage theory generally incorporates a long-term or lifetime implicit labor contract between the employer and employee that has various implications for the employer (Logue, 1979). Salop, Salop (1976) & Blinder (1982) suggest that the delayed vesting of pension plans may decrease employee turnover costs. Becker (1964) suggest that firms have an incentive to expand training costs as a result of delayed vesting, since it causes “average” employees to work longer for the company, resulting in a greater payback of these training costs.
The Concept of Pension
Pension can be conceptualized as a regular payment by an employer to a retired employee usually to the death of the employee; such payment may also be made to the next of kin of a pensioner for a given period (Ogwumike, 2008). In the words of Chizueze, Nwosu & Agba (2011), pension entails money paid at regular bases by government or any establishment to someone who is officially considered retired from active service after serving for a stipulated time usually minimum of ten years and maximum of thirty five years. Thus, it is simply the amount set aside either by an employer or employee or both to ensure that the employee has income to fall back on at retirement. Pension schemes are social security maintenance plan for workers after their disengagement as employees through retirement (Ilesami, 2006). It is the amount paid by government or company to an employee after working for some specific period of time, considered too old or ill to work or have reached the statutory age of retirement (Adam, 2005).
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.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine the role of contributory pension scheme in the economic development of Nigeria. Nigeria pension scheme, Abuja form the population of the study.
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
Introduction
It is important to ascertain that the objective of this study was to ascertain the role of contributory pension scheme in the economic development of Nigeria. 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 the challenges of the role of contributory pension scheme in the economic development of Nigeria
Summary
This study was on the role of contributory pension scheme in the economic development of Nigeria. Three objectives were raised which included: To examine the impact of contributory pension scheme in the economic growth of Nigeria, to evaluate the contribution of the scheme (contributory pension scheme) to the welfare of pensioners in Nigeria and to examine the relationship between contributory pension scheme and the development of Nigerian pension scheme. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from Nigeria pension scheme, Abuja Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
This study has provided evidence on the impact of contributory pension scheme on economic growth in Nigeria using SPSS version. It is clear from the analysis that increases in pension fund contributions and pension fund assets in Nigeria positively affected economic growth but with minimal impact.
Recommendation
- There should be more emphasis on the management of pension assets in the capital market as well as government bond, real estate, investment trust to boost Gross Domestic Product (GDP) of the country (Nigeria).
- Risk assessment should be improved upon in the area of pre-investment risk appraisal. This will help to guide against economic and political risks that are prevalent in an emerging economy of ours.
- PenCom should ensure effective monitoring, supervision and enforcement of the provision of the PRA 2004, which are the inevitable ingredients in the Contributory Pension Scheme towards Gross Domestic Product (GDP).
- There should be prompt reconciliation between PFAs, PFCs and PENCOM and statements of accounts should be given to contributors regularly. This will bring transparency and accountability to the system.
- PFAs should send RSA reports via e-mail and SMS alert to RSA holders regularly to enable them monitor and document the pension contribution. Also there should be a good network of accessibility to members of PFAs whereby discrepancies between their payment and the status reports can be easily tracked and corrected no matter the distance under a limited reasonable time.
References
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