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RETIREMENT POLICY AND PROBLEM OF IMPLEMENTATION IN NIGERIAN PUBLIC SECTOR
ABSTRACT
It is an obvious fact that retirement is an exercise that awaits every worker; an inevitable stage that every worker must attain. But the exercise in Nigeria is one that is dreaded by all and sundry and this is borne out of the ineffectiveness and inefficiency associated with the implementation of the policy in Nigeria. Therefore, this study carried an in-depth research to examine whether retirement policy in the University of Nigeria, Nsukka is properly implemented and as well as to find out some challenges facing the Pension Act, 2004. The methodology adopted in the conduct of this research was both primary and secondary sources of data collection. 650 questionnaires were distributed to the staff of University of Nigeria Nsukka, while 603 were returned which was the figure that was worked with. The analysis of data showed that the administration of retirement policy in the University of Nigeria, Nsukka is not effective and efficient. Also, it was established that corruption is one of the problems that has hindered the proper implementation of retirement policy in Nigeria. Based on the findings of this study, it was recommended that the Act should be reviewed and that both retirees and potential retirees should form a committee that would monitor the exercise right from Abuja, Federal Government allocation to the University through NICON. In conclusion the improper implementation which is as a result of corruption hence the Act needs urgent review.
TABLE OF CONTENTS
Abstract:——————————————————————————– vii
Table of contents:——————————————————————– viii
CHAPTER ONE: INTRODUCTION
1.1 Background to the study: – – – – – – – 1
1.2 Statement of the problem: – – – – – – 3 1.3 Objectives of the study: – – – – – – – 6 1.4 Significance of the study: – – – – – – – 6
1.5 Scope and limitations of the study: – – – – – 7
CHAPTER TWO: LITERATURE REVIEW AND METHODOLOGY. LITERATURE REVIEW
| 2.1 Concept of retirement: – – – – – – | – 9 | |
| 2.1.1 The origin of retirement in Nigeria: – – – – | – 12 | |
| 2.1.2 Retirement and pension policy in the public sector: – | – 13 | |
| 2.1.3 Challenges of the old pension scheme: – – | – | – 19 |
| 2.1.4 The new pension scheme: – – – – | – | – 21 |
| 2.1.5 Features of the pension reform in Nigeria: – – | – | – 22 |
| 2.1.6 Objective of the pension reform act of 2004: – | – | – 26 |
| 2.1.7 Functions of the commission: – – – – | – | – 27 |
| 2.1.8 Implementation problem of pension: – – – | – | – 31 |
| 2.2 Hypotheses: – – – – – – | – | – 34 |
| 2.3 Theoretical framework: – – – – – | – | – 34 |
| 2.4 Methodology: – – – – – – | – | – 37 |
| 2.4.1 Research design: – – – – – – | – | – 38 |
| 2.4.2 Sources of data collection: – – – – | – | – 38 |
| 2.4.3 Population of the study: – – – – – | – | – 39 |
| 2.4.4 Sample population the study: – – – – | – | – 39 |
| 2.4.5 Method of data Analysis: – – – – | – | – 40 |
| 2.5 Clarification of key concepts: – – – – | – | – 40 |
CHAPTER THREE
| BACKGROUND INFORMATION TO THE STUDY: – – – CHAPTER FOUR DATA PRESENTATION AND ANALYSIS | 42 |
| 4.1 Data presentation and analysis: – – – – – | 46 |
| 4.2 Findings: – – – – – – – – – | 59 |
| 4.3 Discussion on findings: – – – – – – – CHAPTER FIVE SUMMARY, RECOMMENDATION, AND CONCLUSION | 61 |
| 5.1 Summary: – – – – – – – – – | 65 |
| 5.2 Recommendations: – – – – – – – – | 66 |
| 5.3 Conclusion: – – – – – – – – – Bibliography | 68 |
CHAPTER ONE: INTRODUCTION
1.1 BACKGROUND TO THE STUDY
The inevitability of ageing has made retirement a natural normal phenomenon in the world of work. The importance of work lies in the fact that it determines the social and economic status of an individual and influences, philosophy, attitude, dressing, behaviour and belief of an individual. However, despite the magnitude of work to individuals and wellness of the society in general, work is inexhaustible to individuals, hence workers must disengage from work (retire). Therefore, retirement is a stage in life that is normal for any worker (public or private) that do not die in active service must undergo. The life span of an individual is divided into three phases, in which retirement is one. The first phase: period of birth up to time of schooling or training before employment. The second phase: period of work, an individual at this stage engage in activities for financial reward. The third phase: the period of retirement is the point of severance from work, which falls under the ambit of disengagement theory in social gerontology. Here people must disengage so that the social system will not be disrupted when an individual dies (Morgan and Kunkel 2001).
Owing to this inevitability, individuals prepare themselves and their dependents, providing psychological and material needs in order to ensure that the dependents have the ability to support themselves when they die. Retirement is a major condition through which individuals gradually relinquish roles and position within the social milieu owing to age. Retirement is not tantamount to redundancy neither a palliative period, but a time of self freedom with the compulsion of work dictates in which an individual is free to spend his/her time as wished (Havighurist, 1968).
But in view of the continual increase in the number of retirees, comfortable life for retirees is becoming a mirage. This is because it has become cumbersome for the public and private sector meet financial commitment for retirement, as payment of benefit is dog with difficulty owing to increase in number of retirees, which is a direct consequence of increase in the number of older persons in general. In an attempt to address the challenges of fiscal distress in retirement, the Federal Government of Nigeria Introduced the Pension Act of 2004. The act abolished non contributory pension and introduced contributory pension. Despite the pension Act, retirees still find it difficult assessing gratuity and monthly pension.
The public service operates an unfunded Defined Benefits Schemes and the payment of retirement benefits are budgeted annually. The annual budgetary allocation for pension has been of the most vulnerable items in budget implementation in the light of resource constraints. Indeed, even where budgetary provisions are made, inadequate and untimely release of founds result in delays and accumulation of arrears. As the scheme is unfounded, there is no opportunity for the accumulation of indivisible founds. Even when the funds were accumulated, pension fund administrators will siphon it thereby making it difficult if not impossible for the retirement benefits provided by the government to reach the supposed beneficiaries (Amujiri, 2009).
More so, the administration of retirement policy in the University of Nigeria has been faced with similar problems especially in the area of implementation. It has even come to the point that pension fund administration has made retirement so miserable that many workers are now afraid of retirement in the University of Nigeria. And this goes to agree with what president Obasanjo (2004) when he noted that over the years, retirement in Nigeria society has became synonymous with suffering as if ageing were a curse rather than a blessing.
1.2 STATEMENT OF THE PROBLEM
Currently, pension Act 2004 is faced with a number of challenges. Such include perception of people about the pension act. Aborishade (2008) described it as attack on the working class and the poor by successive Nigeria government over the years. The problems of retirement policy in Nigeria are divided into two: internal and external. External are those emanating from the management such as pension fund administration and employer (public and private sector) while internal are those in the domain of pensioner
In the first instance, some scholars have criticized the issues of investment of the pension funds in the stock market owing to loss recorded as a result of crash in the capital market. From the position of Prof. Oluwafemi Balogun, the Vice-chancellor of University of Agriculture, Abeokuta as reported by Oni (2009), it was suicidal to invest 60% of pension funds in capital market in view of the financial loss in the stock market.
Another contentious issue concerning pension fund is fraud. Sonoyi
(2009) reported an investigated by the Independent Corrupt Practice Commission (ICPC) in to 90 billion naira fraud as it concerns the pension of the ministry of health in September 2008. In relation to this, employers manipulate contributions of their employees by defaulting in payment.
According to (Amujiri, 2009) poor administrations inadequate delivery structures for payments and lack of a database of pensioners have resulted in delayed payments of benefits and consequent near destitution of pensioners adverse publicity in the media and portrayal of society and government as uncaring to the plight of its senior citizen. Such inherent problems of the old pension scheme in the country have encouraged
corruption in the active work force.
With an estimated outstanding pension liabilities nation wide, about N2 trillion, according to information from Federal Ministry of Finance, the defined Benefits pension scheme cannot be sustained. The Nigeria Railway Corporation is a classic case of unsustainable relationship between the income generating and non income generating salary earners. According to Omor (2005), the Nigeria Railway Corporation generates N 30 million every month, it pays N 250 million to its regular workers. Then there is the accumulated teachers pension itself a consequence of the same skewed pension policy.
In fact, in Nigeria today, retirement that is supposed to be a glorious exit from active service is now seen as a curse. Workers are no longer happy to retire because there benefits are not paid. Consequently, many workers prefer to die in office than to retire without being sure of their future. In addressing the above problems, the following research questions are raised:
- What are retirement and pension all about?
- Is the retirement policy properly implemented in the University of Nigeria, Nsukka?
- Employees of university of Nigeria are satisfied with the pension scheme?
- What are the challenges facing the pension Reforms Act 2004?
1.3 OBJECTIVES OF THE STUDY.
The general Objective of this study is to examine the problem of implementing the retirement policy in Nigeria. While the specific objectives are:
- to find out what retirement and pension are and represent
- to examine whether the retirement policy is properly being implemented in the university of Nigeria, Nsukka.
- to determine if the employees of the university of Nigeria are at home with the pension scheme.
- to find out some of the challenges facing the pension Act 2004
1.4 SIGNIFICANCE OF THE STUDY
This research study serves as an appraisal for the administration of retirement policy in the Nigeria public sector. It bring to the fore some of the challenges faced in the implementation of pension Act as well as how vast employees of the university of Nigeria in particular and the public sector at large are with the new pension Act, 2004 and how they have come to embrace it.
So, theoretically, the study will be of immense benefit to researchers, writers etc who in the future may want to research for their in similar areas or to extend the boundaries of this particular topic. The most beneficiaries of the study are the students of the department of public Administration students of political science in particular and the student of the social sciences. It will also enrich both the libraries of the department of public Administration and that of Nnamdi Azikiwe library, University of Nigeria Nsukka as well as form a reference point for the entire institution.
Empirically, this research will be of tremendous benefit to policy planners especially at the National level towards bridging the gap between policy formulation and policy implementation in order to make sure that the Nigeria retirees are well taken good care of at retirement and also ameliorate the tears that have already been built in the mind of these retirees when they leave active service. The recommendations posted in the study will help both public and private organization especially private sector towards having viable plans for their employees after retirement.
1.5 SCOPE AND LIMITATIONS OF THE STUDY
This research covered various areas of the retirement policy in Nigeria especially its administration in the area of the problems of implementing the policy and how well the policy has succeeded in making life worthwhile for retirees and low potential retirees perceived life after retirement especially members of staff of the University of Nigeria Nsukka.
The researcher in the course of carrying out this study encountered many limitations. The major limitation of this study was lack of time. With the time given for the completion of this work in line with the university academic session it was not easy for researcher to conduct an exhaustive study with regard to the administration of the retirement policy in Nigeria.
Another limitation of this study was lack of financial support. A study of this nature requires enough money to enable the researcher to gather relevant information materials, cover transportation cost from his institution to other organizations where relevant data can be generated in order to add flesh to this study.
Also, it was difficult convincing some of the workers to supply the needed information through questionnaire administered by the researcher. Some of the subjected the researcher to rigorous bureaucratic process of immense challenge was the dearth of information on this topic.
However, despite all these limitations, which affected the researchers holistic approach to the study, the researcher managed to present a work that will stand the taste of time.
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