A STUDY OF IMPACT AND IMPLICATION OF RESTRUCTURING THE NIGERIA PENSION SCHEME
INTRODUCTION
1.1 BACKGROUND OF THE STUDY:
A pension scheme is a planned program that allows corporations to acquire and set away funds to care for their employees when they retire from active work. Beneficiaries can get pension benefits under the system. It could be given to a retired employee, a widow, or someone who is disabled.
There are legal and administrative procedures and processes in place to help achieve this goal in both the public and commercial sectors of our economy. Pension benefits are awarded for noteworthy contributions to the organization.
The scheme is divided into two sections:
(a) A non-funded plan in which the fund is controlled by the employer. This is when payments to retired personnel are made straight from the organization’s operations as they become due, with no funds accumulating. This is available in the public sector and
(b) Contributory plan – in which employees bear a share of the cost (for example, employees pay 10% of their gross monthly income, while the employer pays 15% of the gross monthly revenue). Organizations specify in their pension plans the number of years an employee must work before becoming eligible for a pension. Most organizations in Nigeria currently allow a minimum of five and ten years for gratuity and pension, respectively.
A pension board is frequently present in organizations that manage a pension fund system, such as the local government staff pensions board. In addition, the Nigeria Social Insurance Trust Fund (NSITF) has taken the place of the former national provident fund.
This mostly serves the demands of the private sector. When pension plans are established through “retirement plans” that qualify under the International Revenue Code, authorization from the Joint Tax Board is sought so that the deductions are tax-free.
The following people are required to run the contributory pension schemes:
i. Any employee of a firm incorporated or deemed to be incorporated under the Company and Allied Matters Decree (CAMA) of 1990.
ii. Every worker employed by a partnership, regardless of whether the number of workers employed is less than five, including the owners.
In Nigeria, there are two types of pension schemes:
(a) A self-administered pension program that is controlled and administered by the scheme’s trustee. It is their job to pay retirees’ pensions on time and to invest the balance of the excess fund.
(a) An underwriter manages and administers the insured pension fund scheme on behalf of the scheme’s owners, the Board of Trustees.
The underwriters (actuaries) invest the contributed funds in government bonds or gilt-edged securities, commercial equities, and, more recently, real estate and transportation services. They contribute to the country’s economic development by collecting the principal contributions, while the fund continues to generate more money through the multiplier idea.
The core public service plan is the government scheme, which is a non-funded scheme. To the extent permitted by law, it is intended to be entirely reliant on treasury funds. It is accounted for in the consolidated expenditure. It should be noted that pension is an already incurred commitment, and as such, the fund to satisfy this obligation should be secured and made available at all times.
The goal of the pension scheme is to provide a healthy, stable, economic, and social environment that promotes harmony and gives pensioners a sense of belonging. This is accomplished by:
I Maintaining uninterrupted service, high rates of production, and operational safety are achieved through good labor force quality and efficiency.
(ii) Serving officers’ confidence that their position would be maintained even after their service by giving them with a regular periodic salary to keep them from falling into destitution.
(iii) To maintain loyalty and orderliness in the public trust, the promised pension benefits would be worked conscientiously.
(iv) The pension fund is also utilized to undertake low-cost investments in order to produce additional money and jobs in the economy.
This project addressed the findings and highlighted the challenges in terms of how far those objectives have been met or achieved.
The history of pension in Nigeria dates back to 1946, with the first pension legislation enacted in 1951, referred to as pension law, which was largely created for United Kingdom officers who would move from post to post throughout the enormous British Empire. Its goal was to ensure continuity of service wherever they were deployed to serve. When the statute became applicable to indigenous employees, it was limited to the degree that it was issued at the governor-discretion. general’s
Pension was not an automatic right of Nigerians under the legislation, but rather a voluntary privilege.
To maintain consistency and equality of rights, the federal government enacted the Pension Act No. 102 of the Federation of Nigeria 1979 (Now Cap. 346 laws of the Federation of Nigeria 1990) on April 1, 1974. By establishing the Udorji Public Service Review Commission in 1974, the Decree No. 102 of 1979 harmonized all pension laws and incorporated pensions and gravity, and sought devices for public officers.
The management of the public service pension program is a joint responsibility of the federal and state governments, i.e. for officers who served between March 31, 1976 and today.
In other words, all those whose appointments began on April 1, 1976, are paid entirely by the tier of government in which they served in the federation. The federal government, on the other hand, offers instructions for operating the plan for both state and municipal governments. Chapter two of this project work contains further pension legislation and circulars.
1.2 STATEMENT OF THE PROBLEM:
The issue is whether or not this lovely system is being applied properly. There has been a public outcry about the mistreatment of our older citizens, who have been compelled to use the military to fight for their rights. In order to retrieve their benefits, the widows’ children, next of kin, or dependent relatives of deceased officers must go through a series of financial hardships. As a result, the problem statement is recognized as follows:
(a) A lack of understanding on the part of the operation as to why the pension program was established.
(b) A lack of literary materials and reinforcement of the pension systems’ mission statement, goals, and objectives.
(c) A lack of legislation to support the system and its evaluations.
(d) Inconsistencies in the scheme’s implementation at various levels of government, such as the failure to implement 30 percent harmonization, 150 percent, and 142 percent increments in the Enugu State Pension Scheme.
(e) Incapable trade union leadership.
(f) The absence of a State Pension Board.
(g) Failure to participate in the contributing fund plan.
(h) Inadequate government funding for the scheme.
I Human resource shortage.
(j) Delays in the payment of pension benefits.
(k) Delays in the payment of pension benefits.
(l) Promotional delays that result in re-computations and denial of privileges.
(m) Misappropriation of an insufficient pension fund.
(n) Ghost pension syndrome and receiving benefits that fall short of expectations.
(o) An increase in the death rate.
(p) A lack of funds to purchase a mobile payment system to meet the needs of bedridden older persons.
The scheme’s problems are limitless. All of the aforementioned constraints have resulted in a high mortality rate among our senior persons, as well as challenges for their dependent families, who are a vital part of society. The progression of social delinquencies and other vices in society. As a result, the civil service is rapidly expanding.
1.3 HYPOTHESIS OF RESEARCH:
The researcher used the following hypothesis in this study:
1. Ho: A lack of cash is not an impediment to the government’s Nigeria Pension Scheme policies.
H1: A lack of finances works against the government’s Nigeria Pension Scheme policies.
2. Ho: The pension scheme does not motivate employees when they retire.
H1: A pension scheme promotes employees once they retire.
3 Ho: The term “pension scheme” does not appear in accounting principles.
H1: In accounting principles, a pension scheme is employed.
1.4 THE STUDY’S OBJECTIVES:
The study’s objectives are numerous. The researcher would want to make the following points:
To inform policymakers and workers that they must either improve the pension scheme’s circumstances or face the same unpleasant pill when they retire.
To educate stakeholders, governments, public servants, and the general public about the inherent danger and impending collapse of the pension system as a result of pensioner mistreatment.
To adequately identify the scheme’s flaws and their sources.
To educate shareholders on the goals and origins of pension plans.
The primary goal of this research is to explore better ways for the government of Enugu State to restructure pension and gratuity payments in order to improve social peace in the state.
1.5 OBJECTIVES OF THE STUDY:
The study spanned the years 1999 through 2004. It focuses on Enugu State Public Service, which includes ministries, parastatals, and teachers at primary and secondary schools in the state. It also investigated the Nigerian pension program, which was based on Decree 102 of 1970, Company and Allied Matters Decree (CAMD), which governs public employment in Nigeria.
The report clearly detailed the pension’s problems, some restructure that has occurred, and quickly explained the necessary benefits to them, as well as how to qualify for it. It looked specifically at Enugu State Pensioners as a case study.
THE STUDY HAD THE FOLLOWING LIMITATIONS:
This demand study relies heavily on secondary sources. The government entities are supposed to publish the majority of the raw data. Because of these constraints, which are limitations of the study, the following occurred:
Most government records and publications were never made public, particularly during the military regime. Otherwise, the study would have been extended from 1990 to 2004.
Unpublished data were rarely made available to researchers by government employees who did not want to violate the official secrecy statute. Access to some agencies’ premises in search of data was prohibited. Researchers were given little time to examine materials and collect data, and photocopying facilities were either unavailable or prohibited.
There was a lot of traveling and photocopying involved. A significant amount of money was spent on transportation costs. When photocopying was permitted in some organizations, it was done at exorbitant rates.
Secondary data on the projects was difficult to come by. The arguments addressed border on the government’s abdication of responsibility, which may lead to indictment. As a result, there was no desire to deal inappropriately.
1.7 ORGANISATION OF THE WORK:
This study’s report must be well-organized and correctly formatted. This is done to ensure that information flows smoothly. As a result, the report is divided into five chapters, as follows:
The first chapter provided the study’s introduction. It included the study’s backdrop, problem description, research hypothesis, study objective, and study scope. Others include study constraints, work organization, and term definition.
The second chapter is concerned with the available literature, with an emphasis on the important issues.
The third chapter was about research methods. In that, emphasis was placed on data gathering sources and methods, data presentation, data analysis tools, and study analysis techniques.
The fourth chapter focused on the study’s findings and analyses. The findings were utilized to determine whether our hypothesis should be accepted or rejected.
The fifth chapter contains a summary of the findings, conclusions, recommendations, and solutions to the problems uncovered throughout the investigation.
It is also worth noting that a bibliography and an appendix were supplied at the end of the study. These are the source documents from which the researcher drew the majority of her research conclusions.
1.8 DEFINITIONS OF TERMS:
Some terminology used in this work, as well as the context in which they were employed, are defined and/or explained below:
ACTURIES:
Experts who determine insurance risk and payment by examining the frequency with which pension benefits mature and are paid.
PENSION:
A regular payment or allowance made to an individual or his family in recognition of excellent labor or when particular conditions, such as age, length of service, and so on, are met.
SERVICE PENSIONABLE:
This is a permanent position in the service or any approved service that can be used to calculate an officer’s under the 1999 Decree (now Act) No. 102.
ELIGIBILITY FOR PENSION:
This is the age at which an officer’s pension and gratuity can be computed, and it has been cut from 15 qualifying years to 10 years by the 1992 pension reform. Services rendered after the above-mentioned age will not be considered when calculating officer retirement benefits, as in the case of “leave without pay.”
EMPLOYEES:
These are people who work for other people or organizations and are paid on a monthly basis.
OFFICER:
This refers to a regular employee who is entitled to receive pension benefits as they become due.
SERVICE QUALIFICATION:
Any qualified service, including officer service, is eligible for a pension or gratuity based on duration of service.
ELIGIBILITY vs. ELIGIBILITY:
This section defines who is eligible for pension benefits.
NEXT IN LINE:
Those whose names appear on the dead officer’s record of service, which is held in the ministry’s records office.
RETIREMENT:
This means that an officer’s service is terminated when he or she has served for at least 5 years and no less than 10 years, the periods designated as qualifying an officer for a gratuity and pension.
GRATUITY:
This is a one-time payment made to a retiring officer based on the number of years of service.
RETIRE:
This is a retired officer from the public sector.
SURVIVORS OR SPECIALLY DESIGNATED SURVIVORS:
These are the individuals whose names are provided by the officer on his record of service, which is held in a records office of the deceased officer’s ministry.
TERMINATION:
This could be either retirement or withdrawal. Withdrawal refers to the termination of duty after an officer has served a minimum of 5 years but less than 10 years, qualifying the officer for the gratuity.
WIDOW:
This is the deceased officer’s wife.
RESIGNATION:
This is a type of termination of an officer’s appointment, which may or may not be authorized. Unless the break has been approved, any service provided prior to resignation will not be counted toward re-engagement.
Do You Have New or Fresh Topic? Send Us Your Topic
A STUDY OF IMPACT AND IMPLICATION OF RESTRUCTURING THE NIGERIA PENSION SCHEME
INSTRUCTIONS AFTER PAYMENT
- 1.Your Full name
- 2. Your Active Email Address
- 3. Your Phone Number
- 4. Amount Paid
- 5. Project Topic
- 6. Location you made payment from