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This research work is aimed at examining Management of Pension Schemes in Nigeria with particular reference to Enugu North with the intention of finding out if there are more efficient and effective ways of achieving the objectives of a pension scheme. This research work is divided into five chapters. Chapter one-which is the introduction consists of the background of the study, statement of the problem, significance of the study, purpose of the study, scope of the study, Limitations and definition of terms. Chapter two talks about the literature review, which include the review of some authors on problem of pension fund in Nigeria. Chapter three has to do with methods of data collection, techniques used and administration of the instruments. Chapter four shows the analyses of data, which are broken into questionnaire and interview analysis. Chapter five, which is the last chapter indicates the summary, conclusion on the research and recommendations made by the researcher.





1.1 Background to the Study

The work that one does gives status to the person. It also gives a meaning to life and feelings of contribution to general welfare. Work also permits a person to be active energetic and to have constructive social interaction with others. In spites of the fact that work brings fulfillment. One must retire from active service for one cannot deny the fact that as workers grow older, they make many adjustments and tend to develop gradually into a social group that is separate from the younger worker. Increasing physical and mental limitation associated with advancing age; make it difficult for such people to work safely and competently thereby maintaining previous levels of performance. As the stage of retirement the worker’s output reaches diminishing return. It becomes necessary for the worker to stop working if his employer wants to minimize loss although not everyone would welcome the ideal of retirement even with a generous pension.

Eze (2001:15) explained retirement as the stage where the employer is dissatisfied by the job performance of the employee.

The German chancellor, OHO UON Bismacclc in 1880’s started the concept retirement. His public pension plan supported a retirement age of sixty-five years. Insurance companies began to use that retirement age in planning retirement and annuity programes, though the retirement age vary in countries and organizations, Nigeria operates one of the most generous pension scheme in the world. After ten years of services, an employee qualifies for pension. An employee could then retire and enjoy the rest of his actives life. Result of pension scheme is that the public service is seen as being more lucrative in terms of a person’s work life. Pension is defined as a kind of annuity for the retired public servants for life (in some cases also his dependents after his death) pension is paid in fixed monthly amount often times a certain percentage of the salary. From the government point of view the pension is given in recognition of long monotonous services. The pension system unless specially adopted to meet the hardship to the family of a white collar or blue collar worker, who dies prematurely in service or on the verge of retirement or before enjoying the pensionary benefit for any appreciable period (Abah. 1997) pension do not involve any ask or trouble to the employee after retirement.

History of pension in Nigeria in 1951, pension benefits were introduced into public sector, taking effect from 1946, it brought about a major attraction for employment in the public service. The pension act 102 of 2009 was the main legislation guiding the entire public service. To qualify for pension, later in 1992, it was reformed to minimum of 10 years for pension and 5 years for gratuity.

In 1992, parastatals inaugurated board of trustees for the management of their scheme. Their responsibilities were to decide whether to opt for self administered or insured schemes. One notable fact during this period is that pension was more successful in private sector; most schemes were insured scheme defined by contributions of employees and employers. It provided large sums of retirement benefits or earlier with drawl pension fund managers, portfolio managers, bankers were relevant in pension fund management in the private sector.

Later, Decree 77 of 1993 established the Nigeria social insurance trust fund (NSITF) to replace the old national pension fund managed by the federal government for private sector under this scheme, there were poor administration inadequate delivery system and lack of adequate records of movement from one employment to the other. The enactment of the new pension Act 2004 signed into by president Olusegun Obasanjo of pension fund (Dike, 2006). Guiding the new pension regime is the national pension commission which is the apex regulatory body and the establishment of pension fund administrators and custodians (PFAs and PFCs).

This pension scheme regulated by the pension commission is also private sector driven with government only playing its part by contributing its quota to the relevant pension managers for public servants. Provisions of the pension Act of 2004 all government agencies and private organizations staff must ensure that all its employee’s have pensions. The penalty for non-compliance includes a 2% per month charge of low remitted amount as long as the fault persists. The pension funds must be managed by a national pension fund administrator (PFAS) licensed by the national pension commission and fund must be deposited with a pension fund custodian (PFC) Licensed by the national pension commission. Contribution by employee’s is 7.5% of their monthly emolument comprising basic salary, housing and transport allowance to be matched by employer’s contribution of 7.5% every month. This brings it to a total of 15% every month. In case of military personnel, the contribution per employee is 2.5% while the employer contribution is 12.5%.

It is therefore of a great importance to carry out a study on the management of pension scheme in Nigeria to find out the lapses. The need for the study can be linked to economic empowerment, restoring the dignity of the work and creating a place for the younger generation.

This research will investigate the government and the pension managers to ascertain the origin of the problem.


1.2 Statement of Problems

The issue at the back of government mind while establishing the pension scheme is to provide the employee with a means of securing on retirement a standard of living reasonably consistent with that which years later, we can see that the reverse is the case, the worker decided to create retirement, just like death. In developed countries, the worker looks forward to retirement. The reason for this is not short of good management.

The management of pension scheme has made things so hard for the worker that a retiree has to travel long distance to get his pension paid. It has been observed that those who are retired, while pursuing pension papers in Abuja or Lagos end up running out of cash to sleep under bridges, railways stations, post offices, churches or mosques.

The head of service of the federation while addressing pension desk officers said among other things, ‘’Pension scheme in Nigeria have been inefficient mainly due to inadequate funding, ignorance of employers, mismanagement of fund and gross indiscipline of pension managers. The effect of these to our economic development could be very drastic. That is why this research is intended to suggest solution to the problem of mismanagement of pension schemes. A  hindrance to the fight against bribery, corruption and also hindrance to development. This research deals with the problem of weak financial base as the most delimiting factor towards the management of pension scheme.


1.3     Research questions

  1. What are the reasons why the pensions are not being paid regularly?
  2. What are the means by which the objectives of the pension scheme can be achieved?
  3. What is the role of the government in solving the problem?   


1.4 Objective of the Study

Government are working hard to see that retirees receive their pension regularly and when due. This is why they (the government) established pension scheme.

The specific objectives are:

  1. To investigate whether non-payment of pension are caused by the politician or the unfavorable economies situation of the country.
  2. To explore the flow of workers that retires with the flow of fund from the ministry of finance.
  3. To find out the extent of bribery/corruption in pension management.





1.5 Significance of the Study

Since it is a known fact that most states with management of pension scheme makes provision for widow whose husband died after the completion of the minimum period of qualifying service, it is an aspect of importance of the study.

Again the children of the late civil servant are also entitled to some benefit, a maximum of 1/9 of the civil servant final salary through the pension ordinance. Also pension scheme is important in the sense that a civil servant is entitled to some benefit after retirement from service, it is also done through the pension ordinance.

The study will motivate the management of pension in Nigeria with a particular reference to the department of pension and establishment Enugu North to increase pension as a result of problems associated with pensioners.

Moreover, this study will highlight the need for re-organization of the pension scheme with a view to adopting more dedicated and national approach, in order to avoid the incessant verification and identification parades which has lead to the sudden death of pensioners while wanting to collect their pension.

The study will also proffer solution on how to stop the nefarious situation in which almost everyone in government think of how best he can embezzle public fund while he can rather than wait for an ingrate future administration to take care of them, their limbs and muscles would have weakened.

The study will also address the issue of abundment of pensioners and military veteran who served the country of their old age when they richly needed our love. Support and above all respect, it also helps to broader ones knowledge base. The studying of management of pension scheme in Nigeria gives the researcher the opportunity to widen his/her knowledge on this particular research problem. It enables one to have a deeper insight into the problem under investigation.


1.6 Scope of the Study

The scope of the study on management of pension schemes in Nigeria public service is narrowed down to the department of pension/ establishment Enugu state public service.

Furthermore, this study was centered on effectiveness and efficiency in the management of pension as well as appropriation of pension funds to the pensioners.


1.7 Limitation of the Study

This work is limited by time available for the completion of the project. Financial constraints also limit the study. Not all the needed information was properly provided as a result of ignorance of some of the respondent.


1.8  Definition of terms

PENSION: This is an arrangement of series of regular payment provided by government of former employer for a person who has come to the end of his normal working life, in order words, an income during retirement.   

 DIMINISHING RETURNS: The law of diminishing return states that as more of a variable factor of production is added to a fixed supply of land. A point will reach when average output will diminish. This necessitate the retirement of old sapped workers to make room for the younger generation.

HEAD OF SERVICE: The head of services is the most senior civil servant in the country. He is at the head of the federation.

MANAGEMENT: Management is the process of combine of allocating an organization  input (man material and money) by planning, organizing, directing and controlling for the purpose of producing output which could be in the form of goods and services so as to attain organizational goals (Akpala: 1990:3).

ORGANISATION: An organization is the working together of two or more people in a set of objective to arrive at a goal (stone:1992:4).

PENSION ACT: The pension act is the enabling laws of the federal republic of Nigeria that brought the pension scheme into existence. The enabling act is decree 102 of 2009.

PUBLIC SERVICE: Scheme 20 of decree 102 of 2009 listed all the organization decreed as public service. The public service is government establishment that include statuary co-operation and the civil services.


1.9  Organization of the Study

For analytical simplicity, the research work will be subdivided into five chapters,

Chapter one deals with introduction, statement of problems, objectives of the study, definition of terms and organization of the study.

Chapter two deals with literature review, theoretical frame work, current trend in thinking, summary of the chapter.

Chapter three consist of the methodology, sample and population of the study, source of data, method of data analysis as well as research problems.

Chapter four deals with data presentation, the introduction, brief history of the case study, analysis of research question, testing of hypothesis and interpretation of results, summary of chapter five deals with recommendation and conclusion.


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