CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The greatest challenge
to government worldwide remains the issue relating to pension fund management.
A financial analyst called Alexandra Forbes argues
“Pension Management, world over, has become an
increasingly great concern to most government and countries of the world”.
And coming to Nigeria,
the country was guided by a number of pension regimes prior to the promulgation
of the pension Act 2004, pension schemes in Nigeria had been bedeviled with
many pitfalls. The public service operated an unfounded defined benefit schemes
and the payment of retirement benefits were budgeted annually. The annual
budgetary allocation for pension was often one of the most vulnerable items in
budget implementation in even where budgetary provisions were made, inadequate
and untimely release of fund resulted in delays and accumulation of arrears of
payment of pension rights. It is then obvious that, the defined benefit scheme
could not be sustained.
In the private sector
on the other hand, many employees were not covered by the pension scheme put in
place by their employers and many other schemes were not funded. Besides, where
the schemes were funded, the management of the pension funds was full of
malpractices between the fund management and the trustees of the pension board.
The scenario agitated a re-think of
pension administration in Nigeria by the then President Olusegun Obasanjo`s
administration, accordingly, the administration initiated a pension reform in
order to address, eliminate and eradicate the problems associated with pension
reform act 2004.
Good times come and go,
retirement is definite, and the question therefore is “Can people still live a
good life after retirement”? The non-implementation of budgeted income to
pensioners, a non-effective strategy for pension administration is seemingly a
growing problem in Nigerian economy. Some retirees are forced to continue to
work throughout their life not out of choice but for lack of means of
sustenance at old age. They are therefore forced to go in search of menial jobs
to make ends meet, since they are not even sure of getting their pensions.
Apart from the stress
associated with working at old age, how relevant can an individual be at age 70
or 80 in the face of ever changing knowledge brought about by advancement in
technology? Besides, of what use is life without rest at old age? Even where
one is willing and able to continue working, the opportunity for the elderly to
continue working is declining. However, it is against this backgrounds that the
researcher wishes to develop effective strategy for pension administration in
the Nigeria public sector.
1.2
STATEMENT OF THE PROBLEM
First comes the layoffs then pay cuts
finally a delay in the payments of benefits due to poor policy formulation and
implementation, incorrect record keeping and inadequate accountability of
public funds. The non-implementation of budgeted income to pensioners, delay in
the payment
and denial of pension accrued to pensioners leading
to pensioners protesting over non-payment of pensions and non-compliance with
ethics of public financial management.
1.3 OBJECTIVES
OF THE STUDY
The aims and
objectives of the study are to ;-
1.
To proffer solutions to the problem that brings about a non-effective and
efficient management in pension administration.
2. To
identify measures and steps dealing with the issues of poor implementation of
budgeted income to pensioners.
3.
To
examine the quality of personnel in various pension boards.
4. To
ascertain whether the administration of pension funds are done judiciously.
1.4 TEST OF
HYPOTHESIS
For the purpose of the study, the
following hypothesis were put
forward;-
1. Ho
: Non-effective and efficient management cannot be compared to poor pension
administration.
2. Hi
: Non-effective and efficient management can be compared to poor pension
administration.
Ho : The budgeted income
to pension are not implemented as at when
due.
Hi : The budgeted income
are implemented as at when due
1.5 RESEARCH
QUESTIONS
1.
Can
people still live a good life after retirement?
2.
Why
poor policy formation and implementation of pension benefits?
3.
Does incorrect record keeping and
inadequate accountability of public funds case delay pension benefits?
4. Does
non-implementation of budgeted income to pensioner leading to pensioners
protesting over non-payment of pension?
5. Does non-compliance
with ethics of public financial management cause problem of pension?
1.6 SIGNIFICANCE
OF THE STUDY
Holistic change is
required in order to create a framework that will enable consumers have a
greater financial security at old age. This study signifies a whole lot; it is
intended to find out the intrinsic and extrinsic cause of poor pension
administration. The findings will hopefully:
1.
Assist the researcher that although simple in nature will
a.
Effect
radical improvements in the administration of pension funds
b.
Deliver
significant benefits to all consumers when they retire.
2. Serve
as a guide to public official in charge of this administration of pension funds
to pensioners.
3. Assist
the governments in setting priorities according to their social fiscal
policies.
4. Enable
providers of pension, plans quickly to improve the flexibility and
appropriateness of today`s product.
However, it is the researcher`s belief that
greater attention to ethical and social responsibilities will improve the way
pension funds are managed and ministered.
1.7 SCOPE OF THE STUDY
This project work is concerned with an
effective strategy for pension administration in Nigeria public sector. The
work will be limited with pension commission (PENCOM) and with other
relevant areas such as pension scheme for civil servants, pension governance,
Nigeria Social Insurance Trust Fund, Contributory pension scheme.
1.8
LIMITATIONS OF THE STUDY
1. Developing
effective strategy for pension administration in the Nigeria public sector (a
study of pension commission) has not been an easy task due to inaccessibility
to some relevant materials most managers of government prostrate perceived this
research work as adding their companies thereby withholding vital information.
Consequently, some staff of the pension
bodies was reluctant to discuss the subject freely.
2. Time factor is also
another problem, which affected the compilation of this work, despite the high
scheme in the school; period allocated for the project work must be strictly
worked towards.
3. The incessant bombing in the country
thereby posing everybody a prime
suspect also was
one of the limitations.
1.9
DEFINITION OF TERM
1. PENSION:
is
a fixed sum paid regularly to a person, typically given retirement from
service.
2. PENSION FUND: is
any plan, fund or scheme which provides retirement income.
Pension
should not be confused with severance pay; the former is made in regular
installments while the later is paid in one lump sum.
3. RETIREE:
is
one who has retired from active working life. Retirees receive pension.
4. GRATUITY:
is
money given to an employee in return for service(s) at retirement.
5. LUMP
SUM: is a single payment for a number of separate items,
money paid in full rather than in several smaller amounts.
6. ANNUITY:
is
any terminating stream of fixed payments over a specified period of
time.
7. PENSION
ADMINISTRATION: is the management of pension funds
and fairs.
8. PRE-REQUISITE:
is
a thing required as a condition for some other things to happen or
exist.
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