Academic journal article Journal of Financial Management & Analysis

Methodological Analysis of Pension Administration in Nigeria : Questionnaire Survey Findings - - Lessons for Developing Countries

Academic journal article Journal of Financial Management & Analysis

Methodological Analysis of Pension Administration in Nigeria : Questionnaire Survey Findings - - Lessons for Developing Countries

Article excerpt

Introduction

Pension (for retirement or old age and survivors' benefits arising from death) is one of the solid security attributes approved by the International Labour Organization (ILO) Convention No. 1 02 which has worked hard on social security matters since 1919 and more so since 1966. Against all arguments that have been advanced, including me freedom of the individual worker to live his life the way he deems fit with his hard earned money without being burdened with pension issues, pension scheme has become accepted in most, if not all die countries of the world. This is because there is overwhelming justification/ rationale for pension as we shall show below. However, the modalities for paying pension have been fraught with damming distortions and limitations or challenges in many countries. These have persisted especially in the less developed countries (LDCs) with particular reference to Nigeria, until the new concerns of the government on the matter.

No doubt worried by the devastating sufferings of the vast majority of public sector pensioners who have served the nation meritoriously, the Federal government of Nigeria decided to do something positive about the matter. The dehumanizing suffering of the pensioners has been widely reported in the electronic and print media. Scholarly publications have also focused on the plight of pensioners regarding inadequacy, shoddy and irregular payment of their pension entitlements, among other problems (Ogunbameru1 ; Elumilade2; and Idowu3). There is also the employment of the voice options, including grievance investigation through the mechanisms of Ombudsman, public opinion programmes and servicome or the conduct of service delivery surveys (Olowu4). The television stations and newspapers have repeatedly shown or written on how pensioners, who are no longer in their prime on many occasions, queued for long hours, waiting to be attended to by civil servants (see The Punch)5. Some of them have collapsed in the process. Some other woeful experiences of pensioners had been reported to include offering bribe to civil servants, so that their files could be located and processed. It is against the above background that Omiunu7 aptly described civil servants as enemies to their retired colleagues. All of the above have been to the detriment of productivity, retired public servants, their dependants and a tell tale on the image of the government. The whole problem has been predicated on the inability of the government to continue to maintain its solely or fully funded defined benefits pensions scheme (FFDBPS). This is in spite of the rather small percentage of old people in Africa and Nigeria in particular, compared to other parts of the world, as exemplified by Table 1.

It is saying the obvious that people who have worked productively and successfully and retired from service should be enabled to enjoy their retirement with adequate funds and hence with positive ripple effects. Such a situation can only be obtained from the existence of a satisfactory pension scheme. A satisfactory pension scheme has proved difficult for governments across the world, in both the more developed countries (MDCs) and more so in LDCs. Hence as Chang and Jaegar noted, various governments have been engaging in pension reforms, so as to reduce their financial commitments, while at the same time fulfilling their social corporate responsibility to their retired persons and their dependants.

The positive thing that the Federal government of Nigeria has done about pension reform matter is the introduction of the contributory pension scheme (CPS) through the Pension Reform Act : 20048 which commenced in June 2004 (Nigeria). The CPS requires a civilian employee who is not a daily paid or casual worker, and the employer in either the public or private sector organization to contribute to the scheme. The employee and the employer are to contribute a minimum of seven and a half per cent (7. …

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