CHALLENGES FACED BY RETIREES IN ACCESSING PENSION FUNDS
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CHALLENGES FACED BY RETIREES IN ACCESSING PENSION FUNDS
Chapter one
INTRODUCTION
1.1 Background of the Study
Retirement is a stage of life that all employees must face, whether they are prepared or not. It is the point at which an employee decides to quit his or her job permanently (either voluntarily or involuntarily), and it usually coincides with the person’s eligibility to collect retirement benefits such as social security and business pensions.
It is an unavoidable moment in someone’s life, whether in the private or public sector; it is a time when one’s contribution to an organisation and function as a paid worker expires (Agoro, 2009; Ahmed, 2007; Bassey & Asinya, 2008).
The concept of pension is as old as man and his working environment. Even in early times, man was motivated to save something in cash or in kind, but usually in kind, to cover a rainy day. The wet day featured ancient age.
In modern times, it is often considered as the sum of money paid on a regular basis by employers to former employees who have retired from their employment, usually due to reaching a predetermined age limit in service or for other reasons such as sickness, widowhood, or disablement (Nyong & Duze, 2011).
Pension administration and difficulties linked to the treatment of the elderly and the infirm pose very profound and worrisome challenges around the world, including in the most advanced countries such as the United States of America (USA), the United Kingdom (UK), and France (Ahmad & Oyediran, 2013).
The difference between advanced cultures and ours, according to Kolawole (2003), is the use of imagination, creative thinking, and planning to address complex societal challenges.
Workers, whether in the public or private sectors, are expected to enjoy comfortable lives free of dependency after successfully retiring from active work. According to Rabelo (2002), as described in Sule and Ezegwu (2009), employees’ working lives progress in a predictable manner, from employment to growth to retirement.
While some are able to save enough for retirement or emergencies, the bulk of service members leave with little or no savings. Ideally, governments and organisations should find a means to accommodate and suitably reward employees’ previous efforts through organised pension programmes, allowing them to attain their goals.
This is frequently accomplished through several retirement policies such as the defined benefit (pay-as-you-go) scheme, the National Provident Fund scheme, and the contributory pension system, which is anticipated to be completely funded (Sule & Ezegwu, 2009).
Divergent schools of thought supported the concept of pensions and their value. Kantudu (2005) identifies three schools of thought: contributory, non-contributory, and hybrid.
Most accounting standards-setting agencies and scholars, including Campbell and Fieldstein (2001), support the first school of thinking, which focuses on contribution.
The school of thought stated that if employees contribute a particular proportion to the plan, they will be able to obtain all or part of the benefits at retirement or in the event of termination of appointment or dismissal. This is founded on the concept of operational efficiency in computing and funding.
According to Kantudu (2005), the second school of thinking (non-contributory) was also supported by accounting standards bodies and researchers such as McGill (1984) and Byrne (2003). This school of thinking believes that employers should be responsible for funding the pension asset.
This school believed that the sponsor’s unique support encouraged and attracted more competent and dedicated personnel to the organisation. The benefit is determined by a formula, and the pension is paid at retirement in the form of a lump payment or a life annuity. The third school of thought is the Hybrid School of Thought.
According to this school, pension funds are collective pension plans that benefit from some (but varying) risk sharing between participants and sponsors, and they typically provide guarantees and conditional indexation.
A retiree public servant often receives certain benefits in the form of a gratuity and a pension. Gratuity is the total lump sum paid to a worker upon leaving the service, either through withdrawal or retirement, whereas pension is the sum of annuity paid on a monthly basis to a public servant who leaves service after reaching a specified age limit, usually 60 years or 35 years of active service (Ezeani, 2001; Ebosele, 2001).
In other words, gratuities and pensions are post-employment benefits. These benefits are intended to prevent a sudden significant reduction in the worker’s financial capacity and living standard, which would occur if his monthly wage and allowances were discontinued following disengagement.
The lump payment or gratuity is intended to help the retiree finance any post-retirement pursuit of his choosing, whereas the pension replaces the retiree’s monthly wage while he was still in active service (Babasola, 2000).
As a result, the retiree, who has spent a significant portion of his productive life working to make a living, can sustain and maintain a level of living comparable to what he was used to while in active service.
Most progressive governments pass legislation to support their employment, retirement, and pension programmes in both the public and private sectors of the economy.
According to Casey (2011) and Taiwo (2014), pensions as a kind of social protection against old-age poverty and other concerns have sparked widespread interest around the world, including developed, emerging, and underdeveloped countries.
As a result, this study focuses on the difficulties pensioners encounter in receiving pension money in Ogun state, using a case study of Abeokuta south LGA.
1.2 Statement of the Problem
One of the most difficult obstacles that average employees encounter throughout their working careers is life after retirement. Retirement presents emotional, psychological, and financial issues that workers must plan for ahead of time.
Given that retirement occurs in old age, health is an essential factor. However, in the past, most workers who did not plan ahead of time for retirement often blamed themselves for having short-sighted eyesight.
Today, following the failures of public sector pension systems, there is a significant paradigm shift among workers in terms of how to manage their life in retirement.
Some of the issues affecting the pension scheme’s proper operation include a lack of accountability and transparency in the management of contributed funds, fraud and irregularities
a lack of annual auditing and publication of annual audit reports of the Trustees, the illegal dissolution of the Trustees, and the appointment of unqualified staff to the Trustees’ management Board in violation of the provisions of the Nigeria Pension and Gratuity Law 2006.
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