PERCEPTION OF THE DIFFERENCE BETWEEN RETIRED AND … · 2018-01-01 · Perception of the Difference...

Sahel Analyst: ISSN 1117-4668

PERCEPTION OF THE DIFFERENCE BETWEEN RETIRED AND

SERVING EMPLOYEES IN OPENING SAVING ACCOUNT OR THE

TEMPORARY SAVINGS ON THE DEFINED CONTRIBUTORY

PENSION IN SOKOTO STATE

Nurudeen Bello Ahmed1

Abubakar Sambo Junaidu2

Abstract

This study is on the perception difference between retired and serving

Employees in Sokoto state on the Defined Contributory Pension Scheme

(DCP) in opening Retirement Savings Account (RSA) or the Temporary

Retirement Savings Account (TRSA). Employees of federal ministries,

departments and agencies (MDA’s) in Sokoto state served as the population

of the study. Multi-stage sampling technique was used to arrive at a sample of

735 respondents. The questionnaire was also used to solicit information from

the respondents. The DCP is the independent variable while the dependent

variable is the perception difference measured by employees’ possession of

the retirement savings account or the temporary retirement savings account.

Descriptive and inferential statistics were employed to present and analyse

the data. The study found that there is no significant difference between the

opinions of serving employees and retirees in terms of the opening of

Retirement Savings Account (RSA) or Temporary Retirement Savings Account

(TRSA). The study therefore recommended among others that RSA or TRSA

should be strictly observed by both employees and employers to ensure that

retirement savings are guaranteed after service years and that National

Pension Commission (PENCOM) should checkmate organisations that are yet

to abide strictly on the current policy and the Pension Reform Act 2014 as

amended and sanction them accordingly in order not to jeopardise the

scheme basic objectives of guaranteeing Retirement Savings at retirement.

Keywords: Retired and serving employees, Contributory pension scheme,

Retirement Savings Account, Temporary retirement savings account

Introduction

Retirement from the private and public service is undoubtedly one of

the areas of concern that governments in developing nations nowadays are

giving adequate attention to. According to World Bank (1994), there are

1 Department of Business Administration and Management, Umaru Ali Shinkafi

Polytechnic, Sokoto 2 Department Of Business Administration, Usmanu Danfodiyo University, Sokoto

African Journal of Management (Vol.2, No.1, 2017), Business Admin. University of Maiduguri


persistent and nagging concerns over the payment of retirement benefits in

quite a number of developing countries. World Bank (1994) further reveals

that the issue of pension has received much attention in many countries over

the past decades. In fact, in recent times, the pension has increasingly attracted

the attention of policymakers in many countries as a means of facilitating

privately funded retirement income saving by an aging workforce. In 2003,

President Olusegun Obasanjo reviewed the Old Act and introduced the

Contributory Pension Scheme (CPS) with a view to addressing the persistent

failure of pensioners to receive their pension benefit and a host of others.

Presumably, the Nigeria Pension Reform Act (PRA) (2004) would address

retirees’ sufferings in pursuing their entitlements and benefits.

The Pension Reform Act, (2014) makes provision that would compel

an employer to open a Temporary Retirement Savings Account (TRSA)

on behalf of an employee that failed to open a Retirement Savings Account

(RSA) within three months of assumption of duty. This was not required

under the 2004 Act. The New Pension Scheme is contributory, fully funded,

based on individual accounts that are privately managed by Pension Fund

Administrators with the Pension Fund Asset held by Pension Asset Custodians

and based on the good insurance policy (Sule & Ezeogwu, 2009). However,

Ahmed (2008), observed that since the implementation of the New

Contributory Pension Scheme, annual contributions to the Pension Funds in

the public sector has grown tremendously. There was a general improvement

in the level of pension compliance by employees and employers in both the

public and private sectors. Ahmed (2008) further reveals that the total fund

assets in the custody of Pension Fund Custodians (PFCs) have grown from

₦1630.36 billion by the end of 2011 to ₦2, 197.86 trillion as at December 31,

2012, which represented an increase of 34.81 percent ahead of 2011. The

breakdown further include ₦943.52 billion (42.93%) Retirement Savings

Account (RSA) assets, ₦589.24 billion (26.81%) Closed Pension Fund

Administrator (CPFA) assets, and ₦665.22 billion (30.27%) Approved

Existing Scheme (AES) assets.

Contributory Pension Scheme (CPS) introduced in Nigeria is

investment driven Bayero (2010); that is, the employer and employee

contributions into retirement savings account are to be invested by the PFA’s

in equities and bond markets, and interest or commission accruable to pension

assets remitted to contributors’ funds investment based on the stipulated

provision of the law. He further states that in order for the balance of the funds

to be readily invested in worthwhile projects, it will be desirable to have a

well-developed capital market. Unfortunately, the capital market is not fully

developed and pension funds may end up being invested only on a short-term

basis which usually implies low yields. Under the new pension regime, it is

likely that what retiree gets depends on whether he/she retires when the

market is up or down since accumulated pension funds are to be invested in

market instruments.

Perception of the Difference between Retired and Serving Employees in Opening Saving Account or the Temporary Savings on the Defined Contributory Pension in Sokoto State

Sahel Analyst: ISSN 1117- 4668

The Federal Government formulated policies about retirement from

time to time with a view to improving the lots of workers after serving in the

public or private sectors. These policies have to do with the age, duration of

service, pension, gratuity and administration of the pension schemes as

recommended by various committees and steering committees such as those

on harmonisation of public pension fund management in Nigeria, pension

reform committees and steering committee on pension reforms in public

enterprises in Nigeria (Akinade, 2006).

Many studies on pension were conducted around the world but very

few researchers were conducted in Nigeria such as Bayero (2010) on an

assessment of the viability of contributory pension scheme in the public

service in North Western Nigeria concluded that low contribution density,

lack of financial literacy, suspicion of pension fund administrators and

insurance companies and lack of mechanisms of coping with bankruptcy

largely undermine the viability of contributory pension scheme. The study

also recommends that contributions of employee and employer must be

enhanced, the confidence-building measure needs to be put in place to make

contributors trust the pension administration institutions among others. The

study failed to address the issue of contribution density adequately which

could not focus on the interest or commission accruable to pension assets that

form one of the bases of the existence of the defined contributory pension

scheme.

Ayegba & Isaiah (2013) evaluated pension administration in Nigeria in

order to examine the extent of compliance by the employer of labour in

funding the Retirement Savings Account (RSA) of their employees as a

needful requirement of the new contributory pension scheme in Nigeria. The

study concluded that a well-organised structure that will ensure prompt

payment of retirees and or pensioners is highly desirable and this must be

vigorously pursued by the government of Nigeria. Having or opening a

retirement savings account (RSA) or the temporary retirement savings account

(TRSA) as a pre-requisite for contribution in the new scheme signifies that it

is on the basis of opening a retirement savings account or the temporary

retirement savings account from inception that forms an employee or retirees’

existence or participation in the new scheme. This paper attempts to

investigate whether or not federal government employees actually opened

RSA or TRSA for contribution in the new scheme.

Research Questions

From the foregoing this study sets to investigate and answer the following

question:

i. Do serving employees and retirees in the Federal Government

Organisations (Ministries, Departments and Agencies) (MDA’s) have

any difference in opinion in terms of opening a Retirement Savings

Account (RSA) or Temporary Retirement Savings Account (TRSA)?



Objectives of the Study

The general objective of this paper is to measure the perception

difference between employees and the retirees of the federal government on

the Defined Contributory Pension (DCP). This is what this paper sets to

investigate

Specific objectives include:

i. To examine whether there is a difference between the opinion of

serving employees and retirees in Federal Government Organisations

(Ministries, Departments and Agencies) (MDA’s) in the opening of the

retirement savings account (RSA) or temporary retirement savings

account (TRSA).

Research Hypothesis

Based on the research question and objective, this study develops the

following hypothetical statement to guide it.

HO: There is no significant difference between the opinion of serving

employees and retirees in the MDA’s in terms of opening temporary

retirement savings account (TRSA) or the retirement savings account (RSA).

Literature Review

Concepts of Retirement

Retirement signifies the detachment from primary activity in business,

industry or active service as a full-time employee (Akerlof & Katz, 1989). It

can also be conceptualised as a process that separates an individual from a job

role (Atchley, 1980) or as termination of a pattern of life and a transition

(Omoresemi, 1987; Bethel, 2005). The causes of the detachment or separation

may be due to age, poor health, social pressure or apathy.

Retirement is the point where people stop employment completely

(Wikipedia, 2011). In contrast to Elumelu (2005), a person may also semi-

retire by reducing work hours. Many people chose to retire when they are

eligible for private or public pension benefits, although some are forced to

retire where physical conditions do not allow the person to work anymore (by

illness or accident) or as a result of legislation concerning their position. In

most polity, the idea of retirement is of recent origin, being introduced during

the 19th

and 20th

centuries. Previously, low life expectancy and the absence of

pension arrangements meant that most workers continued to work until death

(OECD, 2005).

Retirement is just another phase of life. Felix, Peter & Willem (2007)

describes that society built on a work ethic, the move from a recognisable

productive work role on one day to a role-less role on the next, has stimulated

the belief that retirement heads to mental and physical illness and sometimes

premature death, to many, work is life and idleness is a living death. Thus, the

British Life Long Learning Minister, Mr. Malcolm Wicks was also quoted in

Eme & Sam (2011) saying that “You don’t stop thinking when you stop

working. I think of retirement as the new learning zone’’. Retirement means



different things to different people. To some it can be exciting, delightful,

thrilling, reading, something to look forward to, while to some it means the

end of the road, psychological, or living death.

Retirement does not mean the end of one’s world rather the beginning

of a new world or phase in life, a time one should be thankful to God for the

journey so far, for many look forward to retirement but not all get to it.

According to Fashoyin (1990) “Public Servants retiring on grounds of age

should be treated as war veterans and not dead woods to be burnt”.

To any Nigerian worker retirement is a dreadful experience and has

acquired a negative colour as retirees in Nigeria are passing through hardship.

To Eme et al (2011) many workers are regretting the day they joined the

public service because Fashoyin (1990) described public servants as not been

treated as war veterans but dead woods to be burnt. Olayiwola (2000) posits

that “in fact, the process of disengagement from active work-life is not an easy

one. Many have been faced with a lot of psychosomatic problems arising from

unpreparedness and the various forms of psycho phobic reactions often

exhibited by several workers in Nigeria”. Also Eme et al (2011) explains that

not many would know or understand what pensioners go through in the

nation, the punishment is such that to retire to a quiet life and honest life has

almost been made impossible in Nigeria, so brutal, heartless, and imposed on

waiting for pensioners that some prefer to die instantly rather than go through

the headache of receiving their pension.

Concepts of Pension and Gratuity

In most cases, the pension is hardly mentioned in seclusion to

“gratuity”. Gratuity is a once and for all money paid to an employee on

retirement, upon death or retirement or on total incapacitation while at work

as posited by Nwajiagu (2007), in some cases, workers are only entitled to

gratuity upon withdrawal of service, and in others: they may be entitled to

both gratuity and pension. But in all cases, a worker who is qualified to

receive pension is usually also entitled to the payment of gratuity. Even if he

is indebted to the organisation at the time of retirement, he is still qualified

unless he was specifically dismissed without benefits based on misconduct.

Robelo (2002) asserted that pension is the method whereby a person

pays into pension scheme a proportion of his/her earnings during his working

life. The contributions provide an income (or pension) on retirement that is

treated as earned income. This is taxed at the investors’ marginal rate of

income tax; while on the other hand, gratuity is a lump sum of money payable

to a retiring officer who has served for a minimum period of time. A greater

importance has been given to pension and gratuity by employers because of

the belief that if employees’ future needs are guaranteed, their fears

ameliorated and properly taken care of, they will be more motivated to

contribute positively to organisation’s output. Similarly, various government

organisations, as well as labour unions, have emphasised the need for sound,

good and workable pension scheme.



Evidence from Nigeria

In Nigeria, the history of the new contributory pension scheme cannot

be discussed in total seclusion from the entirety of pension schemes and the

various stages of evolution passed through. Fapohunda (2013) maintained that

pension is traced first with the English and Spanish Governments in 17th

century purposely paid to Veterans, Military personnel especially with regards

to disability and survivour benefit, then a naval pension was set up in the

United States before it was ratified in its Constitution in 1787 and became

desirous across the world that Nigeria is no exemption in this trend.

The development of pension system in Nigeria, particularly from the

1970s in the Public Sector, including civil and public services, statutory

bodies and government-owned companies were governed by the Pensions Act

of 1979, later the Pensions Act 1990, amended by the Pensions Regulations of

1991.The Act provided for benefits in terms of gratuity and pension payments

and later concludes that scheme was a compulsory and non-contributory one,

which created a right to the monetary collection by public servants and an

obligation on the part of the government to make payment.

Pension System

Until the government of Chief Olusegun Obasanjo in 2003 deemed it

wise and decided to effect change in the way pension was being administered

in Nigeria, Pensions was mandatory in the public sector but optional in private

sector. It is important to note also that, the Federal Government particularly

public service operated an Unfunded Non-Contributory Pension scheme called

the Defined Benefit Pay-As-You-Go (“PAYG”) Scheme (PENCOM, 2008).

In this system, the government taxes active workers to pay for the

benefits of retired workers. Under such system, retirement benefits are a

function of the rate of growth of the tax base, which in turn depends on the

rate of growth of the labour force and the rate of growth of real wages per

worker. Differently put, the retirees may or may not receive their benefits

depending on whether or not their employer has sufficient cash resources to

make payment at that time. Under the Act that established the Pay-As-You-

Go- scheme, the pension or gratuity granted to retirees was on a basis of final

pay and the sums were made chargeable to a consolidated revenue fund of the

federation (Fapohunda, 2013).

Following the negative trend that existed in the Old Pension System,

led to the emergence of the Pension Reform Act (2004) (Contributory Pension

Scheme) also referred to as the defined contribution pension (DCP) which

stipulates that the new scheme is contributory, fully funded based on

individual accounts that are privately managed by Pension Fund

Administrators with the pension funds’ Assets, held by Pension Fund

Custodians. This process is strictly regulated with the aim of achieving the

following objectives

i. Ensuring that every person who has worked in either the public or private

sector receives retirement benefits as and when due.



ii. Assisting improvident individuals by ensuring that they save to cater for

their livelihood during old age or retirement period.

iii. Establishing a uniform set of rules and regulation for the Administration

and payment of retirement benefits in both the public and private sector,

and

iv. Stemming the growth of outstanding pension liabilities

The Defined Contributory Pension (DCP) 2004 highlighted the scheme

funding pattern, individual operational accounts and management of funds,

functions and roles of the pension fund administrators (PFA’s), pension fund

custodians (PFC’s), eligibility for the scheme and those exempted. It also

includes safeguards for the pension scheme, separation of pension fund

administrators and custodians, pension funds custodian guarantee, government

pension contribution, risk rating institutions, compliance officers, reporting

requirement for pension fund administrators and custodians, statutory reserve

fund, sanction, public disclosure of information, benefits and the role of

National Pension Commission (PENCOM) were also highlighted and

observed to be fundamental (PRA, 2014, as Amended).

Theoretical Framework

Under this study, the paper adopts Differed Wage Theory as its

theoretical framework that firms offer pension plans because of economies of

scale in administrative, portfolio management and other costs. The employer

receives cash flow benefits to the extent that the present value of deferred

wages exceeds the required funding. Logue (1979), Salop & Salop (1976)

posits that deferred wage theory generally incorporates a long-term or lifetime

implicit labour contract between the employer and employee that have various

implications for the employer and that it suggests that the delayed vesting of

pension plans may decrease employee turnover costs. Becker (1964) suggests

that firms that have an incentive to expand training costs as a result of delayed

vesting could cause “average” employee to work longer for the company,

resulting in a greater payback of these training costs.

Since this theory postulates that firms offer pension plan based on

economies of scale in the administration, portfolio management and other

costs, it could be described as a difference in perception between employers

and retirees as reported in Becker (1964) that firms that have an incentive to

expand could invest for employee to benefit from entitlement after additional

payback at retirement.

Methodology

The entire federal government employees in Sokoto state constitute the

population of the study. The federal organisations in Sokoto state are the

Ministries, Departments and Agencies (MDA’s). The total number of federal

MDA’s in Sokoto state is 85 with 57 federal Ministries, 14 federal

Departments and 15 federal Agencies in Sokoto state (FCC Bulletin, 2014).It

is practically impossible to reach all employees in federal organisations



serving in Sokoto State and therefore makes sampling inevitable. There were a

total number of 7350 federal government employees serving in the federal

ministries, departments and agencies in Sokoto State (FCC Bulletin, 2014),

while a sample of 735 constituting 10%, of the total population was selected

across the MDA’s serving the state. The justification for selecting 10% was

based on Nwana (1981) suggestions that if a population is a few hundred, a

40% or more sample suffices, if many hundreds 20%, while several thousand

10% or more samples. Therefore, this study adopts 10% of the population

thus: 10/100 x 7350 = 735

This research adopts a multi-stage sampling method i.e. purposive,

stratified, and random sampling technique. The purposive sampling method

was used because the study focuses on existing and retired employees in

federal MDA’s in Sokoto state. The stratified method was also adopted

because the employees work in the different federal organisation and belong

to different cadres as junior staff or senior staff, while random sampling was

used in selecting respondents in each MDA’s. However, a total of 614 copies

of the questionnaire administered were returned and therefore 614 respondents

were used in the study. This includes responses generated from 514 returned

sampled copies of the employee respondents and 72 copies from the retiree

respondents.

For the purpose of this research, data was gathered from one major

source which is the primary source. The primary source of data collection of

this study is the questionnaire which was administered to the respondents.

Two types of questionnaire were used targeted at serving employees and

retirees.

Presentation of Data and Analysis

In this section, the paper uses tables and percentages to elicit

information for the analysis from both the employees and the retirees, thus;

Responses from the Employees

Table 1: Acceptance and Support for Contributory Pension Scheme

TYPE OF ORGANISATION

RESPONSE MINSTRY DEPARTMENT

S

AGENCIES TOTAL

FREQ % FREQ % FREQ % FREQ %

Strongly agree 28 7.6 2 2.4 12 13.3 42 7.7

Agree 156 42.4 28 33.3 36 40.0 220 40.6

Uncertain 44 12.0 16 19.0 10 11.1 70 12.9

Disagree 110 29.9 36 42.9 28 31.1 174 32.1

Strongly

disagree

30 7.6 2 2.4 4 4.4 36 6.6

Total 368 100.0 84 100.0 90 100.0 542 100.0

Source: Field Work, 2015



The extent to which new pension scheme was found acceptable by the

employees is presented in Table 1. It shows that majority of the respondents

supports the introduction of the new pension scheme amongst public servants

in accessing benefits after retirement. The responses from the organisations

show that majority of the respondents in the Ministries representing 184

(about 50%) agreed and strongly agreed respectively in the support of the

New Contributory Pension Scheme which may likely allow public servants in

accessing benefit after retirement while 44(12%) respondents were uncertain

about it.

However, 140 (38%) of the 368 respondents disagreed and strongly

disagreed respectively that the introduction of the New Contributory Pension

is not likely to make it easy for public servants in accessing benefit after

retirement.

On the side of Departments 30 (38%) of the 84 respondents strongly

agreed and disagreed respectively. Furthermore, 16 (19%) of the respondents

were uncertain. However, 38 (about 45%) of the respondents disagreed and

strongly disagreed with this assertion that the CPS does not secure or provide

a safeguard for public servants in accessing benefits after retirement. For the

respondents in the Agencies, 48 (about 53%) strongly agreed and agreed

respectively that the new pension scheme is absolutely suitable and more

secure for public servants in accessing benefits after retirement while only a

few of them i.e. 10 (11.1%) were uncertain. On the other hand, 28 (31%)

respondents disagreed and 4 (4.4%) respondents strongly disagreed that the

introduction of the new pension scheme could not guarantee the security of

public servants in accessing benefit after retirement. Thus, out of the total of

542 respondents across the MDAs, the majority of them (262) representing

about 48% was of the opinion that the New Pension Scheme could be a

saviour in accessing retirement benefit. Consequently, accepting the new

scheme is a policy that must be observed irrespective of one’s interest in the

scheme. This shows a clearly that since it a law then it must be observed.

Table 2: Whether New Pension Scheme Safeguard Accessing Benefit after Retirement


RESPONSE MINISTRIES DEPARTMENTS AGENCIES TOTAL


Strongly agree 8 2.2 0 0.0 0 0.0 8 1.5

Agree 244 66.3 50 59.5 60 66.7 354 65.3

Uncertain 26 7.1 10 11.9 16 17.8 52 9.6

Disagree 72 19.6 22 26.2 14 15.6 108 19.9

Strongly disagree 18 4.9 2 2.4 0 0.0 20 3.7

Total 368 100 84 100 90 100 542 100


Table 2 shows that majority of the respondents across Ministries,

Departments and Agencies were of the opinion that the CPS will safeguard

accessing benefit after retirement. This information is further disaggregated

showing that most respondents from the Ministries representing 244 (about



66%) agreed that the CPS seem more comfortable to them while 8 (about 2%)

of the respondents strongly agreed that it is as well comfortable because it

safeguards accessing benefits after retirement.

Surprisingly, 26 (about 7%) of the respondents were not sure of its

ability to safeguard access to benefits after retirement while 72 (20%) of the

respondents disagreed. Only, 18 (5%) of the respondents strongly disagreed

that the CPS is not likely to safeguard retirees to have access to their benefits

after leaving service. In the Departments, no respondent strongly agreed with

this assertion while a total of 50 (60%) respondents agreed to it. More so, 10

(12%) of the respondents were uncertain while 22 (26.2%) respondents

disagreed and 2 (2.4%) respondents strongly disagreed that the NCPS do not

safeguard retiree access his/her benefit after retirement.

Unlike the Departments, in the Agencies, no respondent strongly

agreed and strongly disagreed with the assertion respectively while 60(67%)

of the respondents agreed that the CPS safeguard accessing benefit after

retirement. However, 14 (16%) respondents disagreed while 16 (18%) of the

respondents were uncertain to the assertion. The result affirms that federal

civil servants have confidence in the Contributory Pension Scheme.

Respondents were also enquired about how long it took them to open the

TRSA or the RSA. The following responses were received as shown in Table

3

Table 3 Period under which RSA was opened




1 – 3 month 120 32.6 16 19.0 30 33.3 166 30.6

4 – 6 month 32 8.7 6 7.1 0 0.0 38 7.0

1 – 3 years 56 15.2 12 14.3 20 22.2 88 16.2

4 years and

above

160 43.5 50 59.5 40 44.4 250 46.2

Total 368 100 84 100 90 100 542 100


The period under which retirement savings account RSA was opened

by respondents is presented in Table 3. The result shows that majority of the

respondents started operating their retirement savings account for over 4 years

and above representing about 250 (about 46%) of the total respondents. In the

case of Ministries, majority of the respondents started operating their RSA for

over 4 years and above representing about 44% followed by the respondents

in the Ministries have opened their retirement savings account for 1and 6

months while only a few respondents (32) representing 9% of the respondents

took 4 to 6 months to open their account.

In the case of Departments, the majority of the respondents opened

their RSA over 4 years and above representing about 60% of the respondents

while very few of them (6) representing about 7% did it within the period of 4

to 6 months. Finally, the majority of the respondents in the Agencies i.e 40



representing about (44%) opened their RSA for over 4 years and above while

none of the respondents open it between 4 and 6 months ago. This shows that

the federal civil servants immediately started to open their accounts when the

policy was introduced. The explanation for having about 31% of the total

respondents of 542 to have opened their accounts within the last 1-3 months

might have been that the respondents joined the civil service recently not

because they intentionally refused to open the account early when CPS was

introduced.

Again, the study found that most of the respondents as indicated in

Table 3 opened their RSA after at least a year. It implies that there is a

problem lingering behind opening RSA either from the employers or from the

employees. This concurs with the findings of Ojonugwa et al. (2013) that

there was a concern with the way and manner employers treat the employee in

the management of the Retirement Savings Account (RSA) or the Temporary

Retirement Savings Account (TRSA). This shows that there is perhaps

lackadaisical behaviour by an employer in the opening of TRSA for an

employer who could not secure his/her RSA on time. Base on the

disaggregated results in Table 3 which shows that employees working with

the Ministries were the most affected. On the question of whether employees

have TRSA before RSA, results are given below:

Table 4: Employee have TRSA before getting RSA




Strongly agree 22 6.0 2 2.4 2 2.2 26 4.8

Agree 136 37.0 34 40.5 38 42.2 208 38.4

Uncertain 26 7.1 6 7.1 10 11.1 42 7.7

Disagree 154 41.8 38 45.2 30 33.3 222 41.0

Strongly

disagree

30 8.2 4 4.8 10 11.1 44 8.1

Total 368 100 84 100 90 100 542 100


On the issue of having TRSA before RSA, Table 4 shows that most of

the respondents were against opening a Temporary Retirement Savings

Account (TRSA) before opening Retirement Savings Account as indicated by

222 (41%) of the respondents. Results from Ministries shows that 22 (6%)

respondents strongly agreed that an employee who secures job should have a

TRSA before getting RSA while 136 (37%) respondents simply agreed. Again

in the Ministries, 26 (7.1%) of the respondents were uncertain while 154

(42%) of the respondents disagreed and 30 (8.2%) respondents strongly

disagreed. In the Departments, 2 (2.4%) respondents strongly agreed, 34

(41%) respondents agreed, 6 (7.1%) respondents were uncertain, 4 (5%)

strongly disagreed and 38 (45.2%) of the respondents disagreed. In the case of

Agencies, 2 (2.2%) of the respondents strongly agreed, 38 (42.2%) agreed, 10



(11.1%) of the respondents each were uncertain and strongly disagreed

respectively and 30 (33.3%) respondents disagreed.

These results implied that there were mixed feelings about whether it

was appropriate to open TRSA before RSA. Most of the respondents across

the MDAs representing about 49% of the total respondents of 542 disagreed

and strongly disagreed with the assertion that employee who secures job

should have a TRSA before getting RSA.

The pension law requires that the monthly pension benefit should be

paid directly into the respondent’s retirement savings account. The study

solicited information from the respondents to know whether they are

comfortable with that requirement. Table 5 presents their responses.

Table 5: Distribution of Respondents on Pension benefit be paid directly to the RSA




Strongly agree 62 16.8 8 9.5 18 20.0 88 16.2

Agree 206 56.0 48 67.1 52 57.8 306 56.6

Uncertain 10 2.7 8 9.5 6 6.7 24 4.4

Disagree 78 21.2 16 19.0 8 8.9 102 18.8

Strongly

disagree

12 3.3 4 4.8 6 6.7 22 4.1

Total 368 100 84 100 90 100 542 100


Table 5 reveals responses on whether monthly pension benefit should

be paid directly into the respondent’s retirement savings account in line with

Federal Government Policy. The table shows that majority of the total

respondents as indicated by 306(57%) supported that it should be paid directly

into the RSA while 102 (19%) opposed it. From Table 5, results across the

MDAs revealed that only a few respondents opposed the idea that monthly

pension benefit should be paid directly into their retirement savings account

(RSA) in line with Federal Government Policy. For instance, only 20 (24%)

respondents out of the 84 respondents from the Departments opposed the idea.

Again, the study found that most of the respondents supported the idea

that pension benefits be paid directly into RSA. This finding agrees with the

finding of Bayero (2010) that the essence of the contributory pension scheme

is to establish a guarantee having to protect benefits against risk. The study

also found that there was constant notification of pension contribution which

conforms to the requirement of section 2 (b) of the PRA 2004 and section 4

(1a).

Response Analysis from Retirees

The study also solicited information from retired civil servants on the

New Pension Scheme. The study started by investigating their marital status to

determine the extent to which their burden concerning family responsibility.

The analysis is therefore based on 52 respondents from the Ministries, 4 from



the Departments and 16 from the Agencies making a total of 72 respondents

across the MDAs.

Table 6: Retirement Status


FREQ % FREQ % % FREQ %

Attain. of Ret.

Age

48 92.3 4 100.0 100.0 68 94.4

Voluntary Ret. 4 7.7 0 0.0 0.0 4 5.6

Total 52 100.0 4 100.0 100.0 72 100.0


This reaffirms the result revealed in Table 6 that most of the

respondents retired on grade level 07-09 because of age limit. The retirement

status of retirees from Ministries, Departments and Agencies is also presented

in Table 6. The table shows that most of the retirees (48) representing about

92.3% from Ministries retired because of attainment of the retirement age

while only 4 of them did voluntary retirement. Interestingly, all the retirees

from Departments and Agencies retired due to the attainment of retirement

age in service as indicated by all the 4 retirees from Departments and all the

16 retirees from Agencies. These results disclose that most of the retirees from

Ministries, Departments and Agencies complied with the retirement age in

line with federal civil service rule.

In order to be sure that all the respondents are participants in the

Contributory Pension Scheme, the study solicited information on the type of

scheme respondents operate.

Table 7: Pension Scheme Operated

TYPES OF ORGANISATION



Contributory 52 100 4 100.0 16 100.0 72 100

Non contrib. 0 00 0 0.0 0 0.0 0 0

Total 52 100.0 4 100.0 16 100.0 72 100.0


Table 7 shows that all the retiree respondents (72) representing 100%

were participants in the New Pension Scheme, 2004. This implies that retired

employees who have served in the federal civil service operated solely under

the Defined Contributory Pension Scheme.



Table 8: Period Spent After Retirement before Accessing Retirement Benefits


RESPONSE MINSTRY DEPARTMENTS AGENCIES TOTAL


1 - 2 months 16 30.8 0 0.0 12 75.0 28 38.9

3 - 4 months 12 23.1 0 0.0 4 25.0 16 22.2

5 - 6 months 12 23.1 0 0.0 0 0.0 12 16.7

6 months &

above

12 23.1 4 100.0 0 0.0 16 22.2

Total 52 100.0 4 100.0 16 100.0 72 100.0


The Table 8 indicates that with the CPS, 28 (39%) of the total

respondents were able to access their retirement benefits within 1-2 months of

retirement, 16 (22.2%) respondents accessed their benefits between 3 and 4

months, 12 (17%) got theirs between 5 and 6 months while 16 (22.2%) of the

respondents received their retirement benefits after 6 months and above.

Responses from the Ministries show that only a few of the respondents

representing 16 (31%) of the 52 respondents received their pension benefits

after 1 to 2 months while other respondents collected their own between 3

months and above. This shows that most of the retirees were able to collect

their retirement benefits between the periods of 3 months and above. In actual

facts, 28 (31%) respondents waited for more than 4 months before collecting

their benefits. This phenomenon is really not inspiring because that was one of

the problems of the old scheme which spent years to access their retirement

benefits. Maybe the possible explanation for the delay would be the

bureaucratic bottleneck associated with the release of funds by the PFAs.

In an attempt to find out if beneficiaries of the CPS are satisfied with

the Federal Government’s decision that all pension contributions should be

paid directly into RSA, the respondents were asked to state their opinion on

whether they agree or disagree with the decision as presented in Table 9.

Table 9: Pension Payment be made directly into RSA




Strongly satisfy 4 7.7 0 0.0 4 25.0 8 11.1

Satisfy 48 92.3 4 100.0 4 25.0 56 77.8

Uncertain 0 0.0 0 0.0 4 25.0 4 5.6

Dissatisfy 0 0 0 0.0 0 0 0 0

Strongly

dissatisfy

0 0.0 0 0.0 4 25.0 4 5.6

Total 52 100.0 4 100.0 16 100.0 72 100.0


Table 9 shows that almost all the respondents indicated that they were

satisfied with the policy of payment pension contribution directly into RSA.

This is indicated by 56 (78%) of the total respondents and 8 (11.1%) of the

respondents were strongly satisfied with the policy while 4 (6%) of the



respondents were indifferent. Only 4 (6%) of the respondents indicated that

they were strongly dissatisfied with the payment method. Thus, only a few

respondents 4(6%) who retired from the Agencies displayed their

dissatisfaction with the policy of paying directly the pension contributions into

RSA.

The respondents were also requested to state their opinion on whether

they are aware of the amount contributed into RSA before their retirement.

Table 10 shows their responses. It indicates that most of the respondents (36)

representing 50% of the respondents agreed to be aware of the total amount

contributed before retirement while 8 (.11.1%) disagreed.

Table 10: Awareness of the amount contributed to the RSA TYPE OF ORGANISATION



Strongly

agree

8 15.4 0 0.0 4 25.0 12 16.7

Agree 36 69.2 0 0.0 0 0.0 36 50.0

Uncertain 8 15.4 0 0.0 8 50.0 16 22.2

Disagree 0 0.0 4 100.0 4 25.0 8 11.1

Strongly

disagree

0 0 0 0 0 0 0 0

Total 52 100.0 4 100.0 16 100.0 72 100.0


Table 10 also shows the results from Ministries that a large number of

retirees (36 or 69.2%) agreed that they knew the total amount of their

contributions before retirement while the respondents in the Departments and

Agencies representing 8 (11.1%) said they did not have knowledge of the

amount they have contributed in their RSAs before retirement.

The implication of these descriptive results indicates that since

employees and retirees must open a retirement savings account or the

temporary retirement savings account as a policy of government prior to

retirement justifies client’s active participation on the scheme as prerequisite

to enjoy retirement benefits as well as guarantee accessibility to the retirement

benefits irrespective of any condition of service while on employment.

Test of Hypothesis

Under this study, the test of the hypothesis result is as follows;

H0: There is no significant difference between the opinion of serving

employees and retirees in the MDA’s in terms of opening temporary

retirement savings account (TRSA) or the retirement savings account (RSA).

Tables 11 and 12 feature descriptive statistics and the Independent

Samples Test, the descriptive statistics provides basic information about the

group comparisons, including the sample size (n), mean, and standard.



The t-Test scores showed that there were 548 respondents who are serving

employees and 72 retirees while the mean of serving employees and retirees in

the MDA’s in terms of opening temporary retirement savings account (TRSA)

or the retirement savings account (RSA) score was 3.87 and 3.78 respectively.

The two-tailed p-value associated with this test as reported in Table 12 was

0.33. The t-Test failed to reveal a statistically significant difference between

the mean scores serving employees (M = 3.87, s = 0.73) and that of retirees

(M = 3.78., SD = 0.79), t (612) = 1.02, p = .33, α = .05. It can be observed that

the p-value of 0.33 is greater than 0.05 level of significance set for the study.

It can, therefore, be concluded that there is no significant difference between

the opinion of serving employees and retirees in the MDA’s in terms of

opening temporary retirement savings account (TRSA) or the retirement

savings account (RSA).

Decision Rule: Based on the results of the t-test analysis, the null

hypothesis which states that there is no significant difference between the

opinion of serving employees and retirees in the MDA’s in terms of opening

temporary retirement savings account (TRSA) or the retirement savings

account (RSA), is accepted.

Findings

The study found that there was no significant difference between the

opinions of serving employees and retirees in terms of the opening of the

retirement savings account or the Temporary Retirement Savings Account.

Conclusion

The major conclusion is that the defined contributory pension scheme

is brighter since employee and employers generally accepted that RSA or

Participants N Mean Std.

Deviation

Employees 542 3.87 0.73

Retirees 72 3.78 0.79

Table 4.40: Descriptive Statistics

Opinion of Serving

Employees & Retirees

onTRSA or RSA

Source: Author’s Computation (2017) Using SPSS Version 21

Equal variances assumed 2.21 0.14 1.02 612 0.33

Equal variances not assumed 0.97 87.94 0.34

Opinion of Serving

Employees &

Retirees on TRSA or

RSA

Source: Author’s Computation (2017) Using SPSS Version 21

Table 4.41: Independent Samples Test for the scores of Employees and Retirees onTRSA or RSA

Levene's Test for

Equality of Variances

t-test for Equality of Means

F Sig. t df Sig. (2-tailed)

Table 11: Descriptive Statistics

Table 12: Independent Samples Test of Retirees on TRSA or RSA



TRSA is of major importance in the administration of pension funds and that

there is no significant difference between the opinion of employees and

retirees in the opening of RSA or TRSA. This may not be unconnected with

the fact that RSA or the TRSA stand as the key and of major importance in the

administration of the defined contributory pension generally. Similarly, this

signifies that the basis for ones’ existence as an employee particularly in the

federal establishments lies on his participation in the scheme.

Recommendations

Since contributory pension scheme is built upon employer and

employee contribution into retirement saving account, differences in opinions

have emerged between serving employees and retirees in opening of retirement

savings account or the temporary retirement savings account hence, retirement

savings account or the temporary retirement savings account should be strictly

observed by both employers and the employees to ensure that retirement

savings are guaranteed after service years.

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