The Management Of Pension Scheme In Nigeria (Problems And Prospects)

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The Management Of Pension Scheme In Nigeria (Problems And Prospects)


Abstract


This research work is on the topic, “The Management of Pension Scheme in Nigeria (Problems and Prospects). The project is aimed at examining the challenges faced by management of pension scheme in Nigeria and achievement or prospects recorded so far. The writer in reviewing literature of this work employed a historical method. In chapter three the researcher made use of survey research plan in which questionnaires were split into section, stratified random sampling were equally applied and statistical data were extracted and used. Furthermore, the writer formulated hypothesis in line with the problems and objectives of the study. However, product moment coefficient of correlation were used to test the hypothesis in which the following result emerged. The amount of pension scheme contribution has a high positive relationship with asset investment portfolio and prospect on amount of contribution were recorded. The FGN bond capital market has a high positive relation with asset investment of pension scheme which created prospect to pension scheme investment system in Nigeria. Biometric system assists to dictate fraud and encourage proper investment of pension scheme in Nigeria. Data collected were analysed and presented with tables and percentages. In view of the findings made, the following recommendation accrued from the result of the research work: Ethics and moral standard should be built. Prompt and regular payment of pension should be adopted, proper investment and expansion of asset investment portfolio should be encouraged. Adequate training should be given to management on how to make effective and efficient use of biometric system.


Chapter One


Introduction

1.1 Background of the Study

Many Nigerians today hardly understand what pension scheme is all about. Though some employers have established occupational pension scheme while other have not a predicated the value of pension scheme.

Those that have not appreciated the value of pension scheme should be encourage ed to do so immediately while the efforts of the progressive employers that provide adequately for the needy should be emulated. While introducing this subject matter of this project, it is necessary that a brief definition of pension be given. Pension is defined as a series of regular payments by an employer or the government to former employee who has reached his normal working life.

This pension payment is due when an employee attains the age of 65 years for all government establishment or at the point of disability or death.

According to the law of diminishing return, a stage is reached when the employees output is below the employers input on him. At such a stage it becomes absolutely necessary for the employee to stop working as his efforts are more or less being wasted from the employers point of view. Such an employee security is provided during retirement since there is pension scheme arrangement.

Apart from basic importance of providing pension, there are others and they include the purpose of pension scheme which make individual have a sense of belonging, strengthens, and create foundation for industrial peace. Thus, any pension scheme which provides for periodic payment to retired employees with the facility of extending the benefits to eligible survivors of usually acceptable to workers.

Now that the policy of setting up pension scheme in any part of the country whether private administered (trust) or insured scheme has been established, the problems which the researcher wants to work on is the management of pension scheme in Nigeria.

The problems encountered by retired civil servants because of the use of term in funding method, the effect of inflation in pension scheme and many other problems have been taken care by the pension reform Act 2004.

Prospect has been achieved in the area of amount contributed, investment of the fund and use of biometric to gather accurate data and reduce fraud.

Based on the foregoing the researcher intend to study management of pension scheme in Nigeria, challenges prospects.


1.2 Statement of the Problem

The idea of management of pension scheme in Nigeria was designed to carter for the welfare of the pensionable retired workers. This had for long gained global recognition and acceptance. Workers whether in public or private sectors are expected to leave comfortable life devoid of any form of dependency after retirement from active services.

The management of pension scheme in Nigeria have continued to pose a serious challenge to both government and private sector organizations in Nigeria, among these problems and challenges one.

  • Non availability or improper records/data storage in the system.
  • Improper investment of pension scheme and inadequate funding of the scheme.
  • In competent and inexperience with lack of trained pension staff which has resulted in uncoordinated administration.
  • Weak regulatory framework, inefficient and non transparent system.
  • Perpetual frauds/irregularities without appropriate sanction on the perpetrators,
  • Inability of the regulatory and supervisory agencies to monitor pension schemes.
  • Inability to determine appropriate investment portfolio especially in this period of economic melt down.

It is against this challenges and problem that the researcher wishes to carry out a research work on
management of pension scheme in Nigeria, challenges and prospects.


1.3 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.

  1. To identify the challenges and prospects of management of pension scheme in Nigeria.
  2. To ascertain if management of pension scheme have enlarged the amount contributed through contributory scheme in Nigeria.
  3. To evaluate and see if there are any prospect in management of pension scheme assets investment portfolio in Nigeria.
  4. To know whether the new biometric system has contributed to check fraud and enhance management of pension scheme in Nigeria.
  5. To find out whether investment of pension scheme has an input in FGN bond capital market in Nigeria.
  6. To advice management of pension scheme in Nigeria on the strategies to improve pension scheme management.

1.4 Research Question

The research is set out to answer the following questions.

  1. What are the challenges and prospects of Management of Pension scheme in Nigeria?
  2. Does the amount contributed in pension scheme through contributory scheme witness growth as a result of increase compliance by employers and employees from management of pension scheme in Nigeria?
  3. What value of assessment can be accorded to pension scheme investment portfolio on pension assets management in Nigeria?
  4. Does the new biometric programme system assist to check fraud and enhance management of pension scheme in Nigeria?
  5. Does the investment of pension scheme has any input in FGN bon capital market in Nigeria?
  6. What are the strategies to improve pension scheme management in Nigeria?

1.5 Research Hypothesis

As a guide in the collection of data for the study certain hypothesis have been formulated which include:

  1. Hi: The amount of pension scheme contribution has a significant effect on assets investment portfolio of pension scheme management in Nigeria.
    Ho: The amount of pension scheme contribution has no significant effect on assets investment portfolio of pension scheme management in Nigeria.
  2. H2: FGN bond capital market has a significant effect on assets investment of pension scheme management in Nigeria.
    Ho: FGN bond capital market has no significant effect on assets investment of pension scheme management in Nigeria.
  3. H3: Biometric system encourage staff training dictate fraud and has significant effect on investment of pension scheme management in Nigeria.
    Ho: Biometric system encourages staff training, dictate fraud and has no significant effect on assets investment of pension scheme management in Nigeria.

1.6 Significance of the Study

This study will be of benefits to the following:

This study will be useful for students academic purpose and it will serve as a database for students academic carrying and future research in the related topic in future.

Pension Managers

The study will be of immense relevant to pension managers, administrators and customers of pension fund.

Stakeholders

The study will educate and as well serve as a means of creating more awareness on the importance/benefit of pension scheme.

Researchers

This study will provide some useful information to researchers and will give the basis for validating or disapproving the findings of the research work.

Nation at Large

The study will offer the pension management the ways and means through which inflation can be efficiently tackled.


1.7 Scope and Limitation of the Study

The scope of the study is centre on management of pension scheme in Nigeria; challenges and prospects. Due to the nature of the study the scope of the study will cover National Pension Commission of Nigeria in Enugu. The choice of limiting the scope to National Pension Commission in Enugu is for easy assessment of data and information required for the research work.

It is necessary to mention that the research was beset with many problems such as: dearth of data, in complete response and some misleading information from respondents. The researcher was objective in analyzing the data generated from the respondents.

Other limitation of the study, were lack of finance coupled with very short period which the research used in combining the academic programme and other personal obligations. However, these limitations are considered so serious as to affect its validity. Meanwhile the scope of time coverage for the research will be a period of six years since the new pension act was in 2004.


1.7 Definition of Terms

Joint Tax Board

This is an approved body that monitor the activities of private sector pension schemes.

Nigeria Social Insurance Trust Fund (NSITF)

Provide and enhance social protection to private sector employees.

National Pension Commission (PENCON)

Is an apex body of pension industry in Nigeria that regulate and supervise the business of pension companies.

National Insurance Commission (NALCOM)

It is an independent body responsible for licensing and regulating insurance companies in Nigeria.

Pension Reform ACT 2004 (PRA)

This is the body under the Pension Reform Act 2004 that regulate the activities of all pension matters.

Pension scheme Administrators (PFAs)

They are Private Limited Liability Companies licensed to manage pension schemes under the Pension Act 2004.

Pension scheme Custodian (PFCs)

They are banks license to hold the pension scheme assets on behalf of the PFA.

Retirement Savings Account (RSA)

This is where the monthly contributions of employees are kept for safe custody.

Security and Exchange Commission (SEC)

These are manages under pension scheme license to manage pension schemes.


Chapter Five


Summary of Findings, Conclusion and Recommendations

5.1 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

  1. Policy implementation; though has been one of the major challenge there has been prospect and improvement on supervision and regulation of the policy.
  2. Arrears of pension; there are prospect hence most of the arrears has been settled.
  3. 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.
  4. In assessing management performance on assets investment they were rated good.
  5. 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.
  6. The strategy to be adopted so as to improve management of pension scheme in Nigeria.
    • School/institution for pension should be established.
    • Pension should be taught in various school in Nigeria.
    • More seminars and workshop should be organized.
    • Proper verification exercise should be conducted.
    • Prompt and regular payment system of pensioner should be adopted.
    • Compliance issue should be addressed.

5.2 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.


5.3 Recommendation

Base on the finding and conclusion, the following recommendation are hereby made:

  1. Ethnics and moral standard should be built.
  2. Training and retaining of staff and management of pension scheme in Nigeria should be adopted.
  3. More local and foreign seminars, and workshop should be conducted regularly to sensitize both workers, staff, management and pensioners.
  4. 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.
  5. Prompt and regular payment of pension should be adopted and practised.
  6. Ghost pensioners should be identified and wiped out.
  7. Adequate investment of asset fund portfolio of pension scheme should be maintained.

5.4 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.


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