Retirement Policy And Problem Of Implementation In Nigerian Public Sector
Retirement Policy And Problem Of Implementation In Nigerian Public Sector
Abstract
The study Retirement policy and the problem of implementation in Nigerian public sector was aimed at determining the effects of old pension schemes (pay-as-you-go-defined benefits) and they are corruption and inflation, weak institutional capacity and non-compliance of stakeholders which lead to non-implementation of the previous pension scheme, thereby growing rise to the contributory pension scheme (PRA 2004), as a way of strengthening the powers of the operators of the scheme and promoting social investments in the national economy.
The survey method was adopted in administering the questionnaires to the staff and retires of Enugu state civil service and the Bourley’s formulae was used to determine the sample size. the retirees complained that they have experience difficulty in claiming their gratuity and pension which have resulted for them not to enjoy their retirement period, due to the challenges facing the defined benefits scheme. The effective implementation of pension reform act (PRA) 2004 would avert the hardship of retirees of Enugu stage civil service after this retirement, thereby forcing them into productive venture after retirement.
To quicken the dispensation of the pensioners benefits in term of gratuities and pension, federal government establishes the national pension commission which later licensed on fund administrators (PFAS) and pension fund custodian (PFCS) for effective operations of the scheme. Finally, relevant legal framework should be put in place by the federal government to ensure political economy and necessary support for the scheme by subsequent government, and all hands should be on deck to ensure the success and sustainability of the pension reform act (PRA) 2004.
Table of Contents
- Title page
- Certification page
- Dedication
- Acknowledgement
- Abstract
- Table of Contents
Chapter One:
Introduction
- 1.1 Background of the study
- 1.2 Statement of the Problem
- 1.3 Objectives of the Study
- 1.4 Hypothesis
- 1.5 Significance of the Study
- 1.6 Delimitations/scope of the study
- 1.7 Limitations of the study
- 1.8 Definition of Terms/Acronyms
Chapter Two:
Literature Review
- 2.1 Origin and development of retirement policy
- 2.2 Retirement and Pension policy in the public sector
- 2.3 Overview of pensions scheme after 2004 Act
- 2.4 Management Structure and Implementations
- 2.5 Factors Responsible for non-Implementation of the Retirement Policy
- 2.6 Legal Framework for the Implementation of the new Retirement Policy (PRA 2004)
- 2.7 Funding and Safeguard of the Scheme
Chapter Three
Research Design and Methodology
- 3.1 Research Design
- 3.2 Population of the study
- 3.3 Sample Selection for the study
- 3.4 Sampling Technique
- 3.5 Method of Data Collation
- 3.6 Validation of Research Instruments
- 3.7 Reliability of the Instrument
- 3.8 Method of Data Presentation and Analysis
Chapter Four:
Data Presentation and Analysis
- 4.1 Data Presentation
- 4.2 Data Analysis and Interpretation
- 4.3 Test of Hypothesis
Chapter Fives:
Summary of Findings, Conclusion and Recommendations
- 5.1 Summary of Findings
- 5.2 Conclusions
- 5.3 Recommendations
- Bibliography
- Appendix
Chapter One
Introduction
1.1 Background of the Study
Retirement can be seen as the period of time in an employee’s, employment life when he or she has satisfactorily served the organization, that employed year of the contract.
This is a period in an employee life when he or she separates from his or her job because of their age. This is also a period when the employee has spent a specified period of time with the employer which qualified the employee to be retired.
Usually, employees serve for thirty five years and yet retired in the public service or are retired at the reliamentage of six five years for both men and women when an employee has satisfied the employment requirements and has retired from work, he or she is supposed to receive a relative amount of money is usually paid to a retiree (a retired employee). This amount may come in regular form (either monthly or quarterly) sometime, most pension schemes require employees to contribute part of their earning (usually 6 or 7%) to pension fund from which they will later receive as pension, these are called contributory schemes. This are other pension schemes. This implies that the employer bears the full cost of paying pension to its retirees.
When an organization applies the contributory pension scheme, it usually employs the services of a pension fund administration (PFA). This is a thirty party organization employed by the employer or both the employer and the employee (in the case of contributory pension scheme) to manage the funds that will eventually be used to pay the pension of employee.
The pension is very important to the retiree because he/she can be able to earn a living from it in his or she old age.
The government being the biggest employee of labour has a major role to play in determining the standard of retirement policy in the country.
It is whatever the private sector see the government implementation that they will want to implement to set high standards (making it possible for the retirees to enjoy the best terms of their retirement benefits). So that the private sector will not have to fall too short of required standards by implementing very poor pensions and gratuity at the end of a very meritorious services to the organization.
1.2 Statement of the Problem
The non-payment of gratuity and pension to retirees has become a recurrent phenomenon in Nigeria since the attainment of political independence. This has seriously affected most of the public sector. These are people who have services their country at all levels and when they are useless. The Nigerian pensioners (especially those from the public sector) stay for months or years without receiving their retirement benefits to enable them survive after their meritorious service to the nation some of them even die before their benefit are paid.
Recently, the guardian newspaper of Monday, February 6, 2010 in an article titled pensioners. Their regrets, their expectations, related the death of one Mr Agboola T. Sunday – a retired senior supervisor in the accounts departments of the Nigerian railway cooperation Mr Agboola died from an ailment which member of his family believed could have been cured if he had been taking drugs recommended for him. According to his son jude our father could not buy drugs which he most needed because he had no money. He had not been paid his pensions for the past 15 months and all other avenues for succor has been exhausted if the government had remembered and paid him his due after 30 years of service to his fatherland, he wouldn’t have died. What befall Mr Agboola happened to be hundred of retired public officers who spend the youthful part of their lives at work only to be allowed to die in want and hunger. This is the predicament of the embattled Nigeria public servants for instance at the town planning department here in Enugu state it takes an average of two years to get any entitlement paid. That is why it is alleged that most people earning their retirement age fell uncomfortable because they may have to wait longer than necessary to get entitlement.
The plights of retirees can best be imagined especially now that the home of pay of an average civil servant can hardly take them home. Though the minimum wages of civil servant has been raised by the federal government to at least to alleviate their sufferings, but the issue goes beyond minimum wage for pensioners.
The fundamental problem is that of delay of payment if the stipend come in as at when due, perhaps the pensioners may well adjust to the diet state of their times and wherever the money takes then they live the rest before the next stipend comes in.
But this is not the situation pensioners are groaning under a heavy yoke, the stipend is small and it is not coming at all.
This study will attempt to examine the impact of implementation of retirement policy on the retirees inline with the question stated below: what impact does the implementation of retirement policy have on the retirees of the Enugu state civil services?
1.3 Objective of the Study
The study aims to asses the impact of retirement policies on the social welfare of retirees of the Enugu state civil service over the years and how best to improve these policies in order to meet the desire of the retirees.
This study aims to unearth the problems that lead to lack of implementation of retirement policies of both the federal government in Nigeria which in turn brings in told hardship to the retiree , lastly the study intends to make recommendations (where necessary) on how to improve the living standard of retired civil servant especially those in Enugu state.
1.4 Hypothesis
- H0: The implementation of retirement policy in Enugu state civil service has no adverse effect on the retirees.
- HI: The implementation of retirement policy in Enugu state civil service has an adverse effect on the retirees.
There by, subjecting them to untold hardship.
Test of Hypothesis
In testing this hypothesis, emphasis will be based on the responses from the population concerned, who will through the questionnaire indicate the effect of the implementation of retirement policy on them. Such indices as the amount of gratuity and pension of the retirees in relation to the prevalent nature of the economy, the consistency of payment of the retirement benefit, the financial situation of the retirees and how it has affected both their lives and that of their families their level of defense on the monthly payment, how it has changed their standard of living will be used.
Taking the population into consideration, the level and nature of their responses to the implementation of retirement policy on them, if the level of positive response to the question is 50% or above 50% the alternative hypothesis HI. The implementation of retirement policy in Enugu state civil service has an adverse effect on the retirees will be accepted. But when the level of response is below 40% the null hypothesis H0 – the implementation of retirement policy in the Enugu state civil service has no adverse effect on the retirees will be accepted.
1.5 Significance of the Study
The importance or significance of the study cannot be over looked in view of the fact that not much work has been done by scholars in relation to this study.
Hence this research work will go a long way in contributing to the existing literature on retirement policy and service in general and the Enugu state civil service in particular and how this impact on both the retirees and the worker nearing retirement.
Also, this work will serve as information media to the general public, most especially the young and the Nigeria retirees and the need to make adequate preparation, psychologically, socially and otherwise before retirement.
1.6 Delimitation / Scope of the Study
This study on retirement policy and problems of implementation in Nigerian public sector ( a case study of Enugu state civil service). The target population is the staffers of Enugu state civil service the findings and recommendation will all be applicable of other commission across the country.
1.7 Limitation of the Study
The motivation of the researcher were owed to its peculiarity and their area of specialization like every research work.
However because of some constraints such as finance, cooperation and time limit given for this study.
(a) Finance:
Due to the economic situation in the country there was not enough money for the researcher to execute the research as desired.
(b) Cooperation:
During the course of obtaining data for the research work most people were not willing to provide the information that could help and some totally refused the questionnaire.
(c) Time Limit:
The interval between the choosing of project topic, conducting the research writing of the project and submission of project was very inadequate, as preparation is done together.
Finally adequate information was gathered from as many sources as possible to make this research workable, authentic and reliable.
1.8 Definition of Terms / Acronyms
The following are the meanings of the terms used in this research study.
Public policy
Some scholars believe that public policy is what government chooses to do or not to do, others assert that policy is what government actually do and not what they intend to or say are going to do.
Retirement
Different scholars view retirement in so many ways, But all agree that an employee of a government establishment officially retires at a maximum age of 65 or a working year of 35 years. Retirement is a process that involves withdrawing from a job and taking up the roles of a retired person. It is an inevitable part of life and a time of adjustment.
Smith, CM (1974) state that retirement is for most people the only part of their live when they have the theoretical opportunity to dispose of their time as they wish which most time are frequently not fulfilled due to lack of money, health and society’s attitude towards them.
Kimmel D.C (1982) described retirement in three ways namely: Retirement as an event, status and a process.
As an event retirement signals the end of work and beginning of leisure. As a status, retirement concerns a change in social position involving roles and expectation different from those that characterized the person’s life during working years. As a process, retirement is a reality for which a person can prepare.
Retirement is seen as a time of significant transition people of advanced years in age experience when they leave the position of their day to day full time employment under the strict control and supervision of an employer of another different situation of self employment which involves nearly absolute self management.
While head Evelyn and James declare to be retired is to be old at least as society sees it, it involves taking on new tasks, letting go off previous responsibilities and changing in response to the demands of on-going relationship. It is a special period or opportunity for learning and growth.
Olagboye A.A (1998) sees retirement as a government scheme guided by policy that if well handled could lead to happiness but otherwise to frustration and disaster.
Chapter Five
Summary of Findings, Conclusion and Recommendations
5.1 Summary of Findings
From the data analysis and interpretation presented in chapter four the following are its findings.
In Enugu state civil service there is a functional retirement policy which is in union with the pension reform act (PRA) 2004.
The nature of retirement in the organization is mostly completion of services and compulsory retirement while the age of retirement is mostly between 55 years and 64 years as well as 65 years and above. The retirees complained that they have experienced difficulty in claiming their gratuity and pension which have resulted to not enjoying their retirement periods. The retirees of Enugu state civil service have a retirement savings account (RSA) thereby, giving their support for the pension reform act 2004.
The following were the factors hindering the effective implementation of the pay-as-you-go (PAYG) defined benefits (DB) scheme non-compliance by stakeholders.
- Corruption inflation weak institutional capacity and wage crisis of which corruption and inflation was rated highest. As a result of this it was agreed that with the pension reform act (PRA) 2004 is able to meet up with the challenges of the previous retirement policy, so as to enable retirees meet up the challenges of life after retirement arising from effective management and practice of PRA 2004.
- The effective implementation of pension reform act (PRA) 2004 would avert the hardships of retirees of Enugu state civil service after their retirement. These have force some of them to engage in other productive venture in retirement at least average.
- The effort of government towards stabilizing social security for retirees in Nigeria is well commendable and the following were their under the current dispensation.
- Effective management and practice of PRA 2004 must be sustained.
- It helps in the provision of social security and protection during retirement.
- Having a positive attitude towards retirements.
- It lessen the burden of life after retirement and also it have its own obnoxious laws this require caution and fiscal discipline among operators of the scheme (PRA 2004).
Also in testing the hypothesis, the chi-square statistical tool was adopted the result shows that the alternative hypothesis was accepted and therefore conclude that the effective implementation of pension reform act would avert the hardships of retirees of Enugu state civil service after retirement.
5.2 Conclusion
It has been observed that retirees of yesterday are experiencing difficulty moment especially those who did not plan for their retirement but the pension reform act 2004 as amended there are a lot of benefits accruing to pensioners today as a result of contributory scheme, thereby providing them the opportunity to plan for their retirement with rising challenges in socio-economic life of the state and nation government have been fulfilling their own part of the contributions thereby providing adequate funds for effective implementation of pension reform act among the operators of the scheme (PFAS, PFCS and CPFAS).
It was also observed that if retirement age is reviewed upward (i.e from 60 to 70) as it is being speculated by top management board thereby extending their years of service. This will go along way in affecting the growth and development of the state civil service commission.
Consequently, this creates a great fear and anxiety among probation retirees whose retirement might be compulsory and unexpected thereby leading to corrupt practices and embezzlement of funds in order to amass wealth for life after retirement.
The purpose of the pension reform act 2004 is to alleviate the suffering of pensioners in the country because the old system of payment was dubious it was dubious that pensioners were cheated by their employers (Okpebholo 2011:91) to quicken the dispensation of the pensioners benefits in terms of gratuities and pension the federal government went further to establish the national pension commission (NPC PENCOM) which later licensed pension fund administrators (PFAS) and pension fund custodians (PFCS).
According to the federation of informal workers organization of Nigeria (FIWON) everyone needs access to social security children needs financial support from society to help their families cope with the rising cost of education and health care. Workers needs protection against risk of loss of income because of incapacity for work employers and enterprises needs social security for a productive workforce pensioners need income security for a satisfactory and fulfilling retirement society needs. Social security for stable labour relations social security helps create a positive attitude towards structural and technical change as well as to the challenges of globalization and its potential benefits.
The above suggestion were made in cognizance of pension reform act (2004) and this requires effective and efficient implementation through coordination and management of the operations of PRA 2004. This had enabled most employees in both public and private sector to have retirement saving account. Many administrators of the PRA 2004 must live up to their integrity and perform their function diligently.
5.3 Recommendations
In the light of the above discussion and study, the following recommendations were made:
- The roles and functions of PFAS and PFCS are pivotal to the success of the defined contributory pension scheme which believes on them therefore, to play the game by the rules, ensure probity, sincerity, unflinching commitment to the success of the scheme and provision of service with passion to account holders/pensioners in order to guarantee availability of retirement benefits as and when due.
- The provision of enabling environment for effective implementation of the pension system is the responsibility of pencom and the federal government.
- The national pension commission (pencom) should take full responsibility of pensioners liabilities even serving as an under taker when the pensioner die instead of accumulating indebtedness for both the pensioners and their next of kins.
- If the government wants more patronage of this scheme, it has to be obliterate section 4 subsection 1a, b, c and 2 of the act that constitutes odds to the financial well being of the pensioners. It is this section particularly that makes some organizations to object to the admission that the scheme is already a mess that they government had wanted to avoid all long. Therefore, the national assembly should rise up to the occasion with the view to reviewing it.
- There is an urgent need for presidential intervention in this matter, president Goodluck Jonathan should be passionate enough to use his good office to set aside the obnoxious section of the pension act of 2004 that has now crumbled the helpless pensioners of this country into object penury.
- Also there should be full payment of the pensioners gratuity as to enable them to offset their various mortgage housing loans and other indebtedness (Okpebholo 2011:41).
- Pencom should ensure effective monitory of all players adequate sanction of erring operators and good coverage of all stakeholders.
- The performer indicators for pencom should include the degree level of compliance by operators and the percentage coverage of Nigerian workforce by the scheme.
- Relevant legal framework should be put in place by the federal government to ensure political economy and necessary support for the scheme by subsequent governments.
- The macroeconomic effects of the saving culture the pension system would engender in the country will go a long way to revolutionize investment into the real sector, employment generation, poverty reduction and growth in the economy in general.
- Consequently all hands should be on deck to ensure the success and sustainability of the pension reform act (PRA) 2004.
- The social pension provides a regular sour of income to elders and their house holds and is providing to be a powerful instrument of development by supporting households economic activity and raising investment in physical and human capital. The social pension has let to a significant improvement in the status of elders within their households (Kolmolage 2011).
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