PROBLEM OF PENSION ADMINISTRATION IN OF...

PROBLEM OF PENSION ADMINISTRATION IN

NIGERIA, A CASE STUDY OF THE UNIVERSITY

OF NIGERIA, NSUKKA (1990–2006)

by

ENIBE, OJIUGO G. (Mrs)

Reg. No: MSC/PhD/2005/40086

DEPARTMENT OF PUBLIC ADMINISTRATION &

LOCAL GOVERNMENT

UNIVERSITY OF NIGERIA, NSUKKA

MARCH 2009

PROBLEM OF PENSION ADMINISTRATION IN

NIGERIA, A CASE STUDY OF THE UNIVERSITY

OF NIGERIA, NSUKKA (1990–2006)

by

ENIBE, OJIUGO G. (Mrs)

Reg. No: MSC/PhD/2005/40086

Submitted in partial fullfilment of the requirements for

the award of the degree of Master of Science (MSc) in

Public Administration in the

DEPARTMENT OF PUBLIC ADMINISTRATION &

LOCAL GOVERNMENT


MARCH 2009

APPROVAL PAGE

THIS PROJECT REPORT HAS BEEN APPROVED ON BEHALF OFTHE DEPARTMENT OF PUBLIC ADMINISTRATION & LOCAL GOV-ERNMENT, UNIVERSITY OF NIGERIA, NSUKKA, NIGERIA

BY

DR (MRS) R. C. ONAHHEAD OF DEPARTMENT

PROF (MRS) PATIENCE ONOKALADEAN, FACULTY OF SOCIAL SCIENCES

iii

CERTIFICATION

This is to certify that Mrs Ojiugo G. Enibe, a Postgraduate student of theDepartment of Public Administration and Local Government, University ofNigeria, Nsukka, Nigeria; and whose registration number is MSC/PhD/2005/40086has satisfactorily completed the requirements for the coursework and researchfor the award of the degree of Master of Science (MSc) in Public Adminis-tration of this University.

The work presented in this Project Report is original, and has not beenpresented previously for the award of the degree or diploma of this or anyother University.

ENIBE, OJIUGO G. (Mrs)Reg. No: MSC/PhD/2005/40086

Prof F. C. OKOLISUPERVISOR

DR (MRS) R. C. ONAHHEAD OF DEPARTMENT

iv

DEDICATION

This work is dedicated to all those who have provided the needed manpowerduring their active service to the nation and are now retirees. I salute yourdedication to work during the service years.

v

AbstractIn this project, the problem of pension administration in Nigeria has beenconsidered from the perspective of the University of Nigeria, Nsukka. Thestudy involved an extensive review of available literature drawn from var-ious sources, such as textbooks, published papers, newspaper articles anddocuments available online from the Internet. In addition, oral interviewsinvolving representatives of the major stakeholders were conducted usingboth structured and unstructured questionnaire. The structured question-naire employed a five-point Linkert scale. The respondents included pensionadministrators, pensioners and other knowledgeable persons. The data ob-tained from the interviews were analysed using simple statistical proceduresincorporated in a computer spreadsheet software. This yielded condenseddata that are presented as tables or simple bar charts. The study found thatabout 58% of the respondents retired by reason of age, the next 30% retiredon ground of length of service, while about 5.6% each retired on grounds ofhealth or personal volition. Further, about 46% of the respondents indicatedthat their pensions were not regular, the interval between payments rang-ing from one (1) month to over six (6) months. In addition, the amountsactually paid varied from 100% of what was due to as low as 50%. Fur-ther, over 66% of the respondents did not receive their gratuity within oneyear of retirement, implying that many retired staff were forced into finan-cial stresses upon retirement. The study also found that if the contributorypesion scheme defined in the 2004 pension Reform Act are faithfully applied,many of these problems would be effectively resolved. Other benefits of thenew scheme were highlighted. From the study, it is recommended that lumpsum payment of gratuity as contained in the Pension Act of 1990 should beretained for immediate enjoyment by a newly retired employee to assist in hisrehabilitation; the rate of the contributory pension into retirement savingsaccount (RSA) should be put at 5% and 10% for employees and employersrespectively and there should be equitable representation of all stakeholdersin the National Pension Commission (NPC) to ensure confidence and probity.

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ACKNOWLEDGEMENTS

This work would not have been completed without much contributions fromseveral people.

For this work to come to a successful end, I would like to appreciatemy supervisor Prof. F. C. Okoli, who had devoted his time and efforts tosupervise this work. I also thank the Pension Manager, University of Nigeria,Mr. K. T. Ihebom for the cooperation he gave me during Interview Sessionswith him; and also for the materials he provided to assist me in the courseof carrying out this research work.

Also to be appreciated is the assistance received from Mr. J. N. Jisieike ofthe Personnel Services Department, University of Nigeria, Nsukka, who alsoprovided some materials used for this work.

My special gratitude goes to Prof. Walford Chukwu (an Associate Pro-fessor) in the Dept. of Statistics, University of Nigeria, Nsukka who assistedme in the data analysis.

Mrs. A. Obasigwe, Mr. Obineche Kanu and Mr. Damian Ogbonna alsoassisted me in the distribution of the questionnaire. I appreciate their deepcommitment and kind gestures.

I also thank Dr. Emma Iwundu, for his contributions, constructive criti-cisms and useful suggestions that enhanced the quality of this work.

I wish to thank my sweet husband, Prof. S. O. Enibe, immensely for hisimmeasurable support and encouragement to me for the successful completionof this work.

I also thank God for our children, Arinze, Chimaluka, Ebube, Mmesoma,Chiagoziem and Obichukwu as well as my cousin, Ijeoma, for their immensesupport during the period of carrying out this research work.

My appreciation goes to my Director at the National Centre for Energy Re-search and Development, University of Nigeria, Nsukka, Prof. O. U. Oparaku;my immediate boss, Mr. Innocent Imuoh and other colleagues and friendstoo numerous to mention for their moral support during the course of this

vii

work.Above all, my deepest appreciation goes to God, most high, from whom

all wisdom, knowledge and understanding flow, the source of my life, forproviding all I needed for this work. To him alone be all the glory.

viii of 108

Contents

TITLE PAGE i

APPROVAL PAGE iii

CERTIFICATION iv

DEDICATION v

Abstract vi

ACKNOWLEDGEMENTS vii

1 INTRODUCTION 11.1 BACKGROUND TO THE STUDY . . . . . . . . . . . . . . . 11.2 STATEMENT OF THE PROBLEM . . . . . . . . . . . . . . 51.3 RESEARCH QUESTIONS . . . . . . . . . . . . . . . . . . . . 61.4 Objectives of the study . . . . . . . . . . . . . . . . . . . . . . 71.5 Hypotheses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81.6 SIGNIFICANCE OF THE STUDY . . . . . . . . . . . . . . . 81.7 SCOPE AND LIMITATION OF THE STUDY . . . . . . . . . 9

2 LITERATURE REVIEW & RESEARCH METHOD 112.1 Literature Review . . . . . . . . . . . . . . . . . . . . . . . . . 11

2.1.1 CONCEPT OF PENSIONS . . . . . . . . . . . . . . . 112.1.2 Pension Plans . . . . . . . . . . . . . . . . . . . . . . . 142.1.3 CONDITIONS FOR PENSION AND GRATUITY . . 162.1.4 HISTORY OF PENSIONS ADMINISTRATION IN NIGE-

RIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182.1.5 REGULATIONS GUIDING THE ADMINISTRATION

OF PENSION AND GRATUITY IN NIGERIA . . . . 21

ix

CONTENTS

2.1.6 PROBLEMS OF PENSION ADMINISTRATION INNIGERIA . . . . . . . . . . . . . . . . . . . . . . . . . 25

2.1.7 Rationale for the Reforms . . . . . . . . . . . . . . . . 282.1.8 THE CONTRIBUTORY PENSION SCHEME . . . . . 302.1.9 ELEMENTS OF THE NEW CONTRIBUTORY PEN-

SION SCHEME . . . . . . . . . . . . . . . . . . . . . . 302.1.10 ADVANTAGES OF 2004 REVIEW PENSION ACT. . 402.1.11 IMPACT OF THE 2004 PENSION SCHEME ON THE

ECONOMY . . . . . . . . . . . . . . . . . . . . . . . . 412.1.12 BENEFITS FOR THE NIGERIAN WORKER . . . . 42

2.2 GAPS IN LITERATURE . . . . . . . . . . . . . . . . . . . . 422.3 Hypotheses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432.4 Key Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . 442.5 METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . 47

2.5.1 Theoretical Framework . . . . . . . . . . . . . . . . . . 482.5.2 Method of Data Collection . . . . . . . . . . . . . . . . 552.5.3 Method of Data Analysis . . . . . . . . . . . . . . . . . 60

3 STUDY AREA/GENERAL INFORMATION 633.1 BACKGROUND OF THE AREA . . . . . . . . . . . . . . . . 633.2 Organigram . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663.3 Occupation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 693.4 ECONOMIC PATTERN . . . . . . . . . . . . . . . . . . . . . 713.5 PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . 72

4 DATA PRESENTATION/ANALYSIS 754.1 Data Presentation . . . . . . . . . . . . . . . . . . . . . . . . . 754.2 Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

4.2.1 Distribution of Responses . . . . . . . . . . . . . . . . 764.2.2 Analysis of Responses . . . . . . . . . . . . . . . . . . 76

5 SUMMARY, CONCLUSIONS, RECOMMENDATIONS 905.1 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 905.2 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 915.3 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . 92

BIBLIOGRAPHY 94

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CONTENTS

List of Tables 98

List of Figures 99

APPENDICES 100

A Questionnaire 100

B INTERVIEW SCHEDULE 107B.1 Unstructured (Oral) Interview . . . . . . . . . . . . . . . . . . 107B.2 Interview with Pension Manager . . . . . . . . . . . . . . . . . 108

xi of 108

Chapter 1

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Pension administration in Nigeria has been saddled with many problems,

both in the public service and private sector. The public service operates an

unfunded Defined Benefit Scheme and the payment of retirement benefits are

budgeted annually. The annual budgetary allocation for pension has been one

of the most vulnerable items in budget implementation in view of resource

constraints. Indeed, even where budgetary provisions are made, inadequate

and untimely release of funds culminate in delays and accumulation of arrears.

However, current huge arrears of pension payments are only the symptom

of a much deeper crisis. As the scheme is not funded, opportunity for the

accumulation of investible funds is lacking. Even where funds were accu-

mulated under some parastatals schemes, restrictive investment policies and

1.1. BACKGROUND TO THE STUDY

practices sometimes limited the capacity of such funds to grow.

Also, political instability and unstable labour policies in the past had en-

dangered massive premature retirements thus creating an unstable pensioner

to- active worker ratio. In addition, inadequate delivery structures for pay-

ment and lack of a data base of pensioners have resulted in delayed payments

of benefits and consequent near destitution of pensioners; adverse publicity

in the media and projection of society and government as uncaring to the

plight of its senior citizens. Such pecuniary problems of the former Pension

Scheme in the country have resulted in insecurity and contributed to high

level corruption in the active work force.

It is important to mention that an estimated outstanding pension liabilities

across the country of approximately N2 trillion cannot be sustained within

the Defined Benefits Pension Scheme. Hence the need for a reformation of

the Pension Scheme which culminated in the 2004 Pension Reform Act in

Nigeria.

However, the Act has been enacted without much sensitization of the

worker who the law directly affects, before the passage of the Bill by the

National Assembly, whose members were supposed to represent the interest

of the whole Nigerian people.

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According to Bob Ojujoh, Vanguard, Lagos, January 2, 2005, some im-

portant highlights of the previous Pension Act 1990, repealed by the present

Act include:

1. It lacked contributory provision from the employees in the public service.

2. Where an employee puts in 5 years of service, he becomes qualified for

gratuity payable in lump sum of money at once on retirement, to enable

him rehabilitate himself and family.

3. After 10 years of service in the Public Sector, an employee becomes

qualified for both gratuity and pension where such employee retires vol-

untarily, he is paid his gratuity emblock and then starts to receive his

monthly pension upon attaining 45 years old. However, where the em-

ployee is compulsorily retired before attaining 45 years of age, he starts

receiving his pension immediately in addition to the paid gratuity in

lump sum.

The service in Public Sector is limited to 35 years of service or 60 years

of age whichever comes earlier. This is what is known as contract of service

or employment covered with statutory flavour in the public sector. In other

words, this is what provides for job security in the public sector. The next

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of kin of an employee who dies in the service is paid gratuity and a 5 year

pension (at once due to the employee as at the date he died (ie deceased

benefit).

Nigeria for the past two decades has grappled with the problem of how

retirement benefits of workers in the civil and public services could be paid.

The past Pension Schemes were fraught with so much irregularities and graft

that left contributors questioning the rationale for the scheme, where many

could not easily access their entitlements upon retirement. There were re-

ported cases where many retired workers died from heart attacks and long

term sicknesses, on discovering that all their life savings were gone and their

benefits were not forthcoming.

The previous Pension Scheme had a lot of shortcomings, which brought

hardship and sufferings to beneficiaries. A good number of them had to wait

for several years to get their pensions.

Indeed, the last pension arrangement suffered from lack of adequate fund-

ing and this culminated in huge outstanding liabilities of retirement benefits.

The pension reform Act signed into law in June 2004, introduced reforms

in the structure of pension administration in Nigeria. The law makes it

mandatory for all employees of the federal government and workers in the

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1.2. STATEMENT OF THE PROBLEM

private sector, where the total number of employees is five (5) or more, to

join the contributory pension scheme.

The Act required that only licensed Pension Fund Administrators (PFA)

manage Pension Funds, while the Pension Fund assets can only be held by

licensed Pension Fund Custodians (PFC). The Act also establishes the Na-

tional Pension Commission popularly known as (PENCOM) to regulate, su-

pervise and ensure effective administration of pension affairs in Nigeria.

1.2 STATEMENT OF THE PROBLEM

Pension administration has been saddled with a lot of problems in Nigeria

over the years. The old Pension Scheme has been unfunded and grossly

mismanaged, and this consequently brought a lot of untold hardships and

sufferings to pensioners. Hence, retirement benefits in form of pensions and

gratuities were not paid to retired workers as and when due. This scenario

resulted in accumulation of huge retirement benefits which were owed to re-

tirees. Subsequently, many of the beneficiaries had to wait for several months

and in some cases many years as in the case of the University of Nigeria for

the payment of their gratuity and annuity. The overall consequence is that

many retired workers died out of frustrations, and lack of funds to maintain5 of 108

1.3. RESEARCH QUESTIONS

their lives, especially in old age when they could no longer engage in any

meaningful job. Many existing pension administrators could no longer live

up to expectation as the hope of many pensioners was dashed. In order to

bring this problem to the barest minimum, the federal government in 2004,

passed a bill to reform the entire system of pension administration in Nigeria,

but still, the method, mode and system of pension administration have not

been improved. It is against this background that the following problems of

pension administration would be discussed.

1.3 RESEARCH QUESTIONS

A number of research problems have been found to be relevant to this study,

and may be summarised as follows:

1. What is the concept of pension administration in Nigeria?

2. What are the causes of delay in the administration of pension and gra-

tuity in Nigeria?

3. Are there regulations guiding the administration of pension and gratuity

in Nigeria?

4. What are the impact of the delay on the retired workers, especially in6 of 108

1.4. OBJECTIVES OF THE STUDY

the University of Nigeria?

5. What remedy has the new pension scheme provided to the identified

problems of pension administration in Nigeria?

1.4 Objectives of the study

The main objectives of this study include the following:

1. To ascertain the reasons for delays in the payment of pensions and gra-

tuity of retired workers in the University of Nigeria.

2. To find out the major institutional structures that made the old pension

system not very effective in the University of Nigeria.

3. To examine the impact of the delays in the payment of pensions and

gratuities of retired workers University of Nigeria.

4. To find out the problems associated with the previous pension adminis-

trators in the University of Nigeria.

5. To highlight the benefits of the contributory pension scheme to pension

administration in University of Nigeria.

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1.5. HYPOTHESES

1.5 Hypotheses

The following hypotheses have been developed to guide the conduct of the

study:

1. The death of many retirees has been due to the delay in the administra-

tion of Pension and gratuity in Nigeria.

2. Ineffective implementation of Pension regulations/laws in Nigeria has

resulted in the reckless behaviours of the pension administrators

3. The new Pension administration offers a better future for retirees in

Nigeria.

1.6 SIGNIFICANCE OF THE STUDY

It is expected that this study will make some useful contributions in the field

of knowledge. Some of the contributions are outlined below.

1. The study will lead to improvements in the administration of pensions

and gratuities in Nigeria.

2. The governments would be better informed on the ways of achieving

better performance in the administration of pensions and gratuities in

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1.7. SCOPE AND LIMITATION OF THE STUDY

Nigeria.

3. It will provide solutions to the problem of the institutional structure

inherent in the system.

4. It will enhance the performance of pension managers and all those in-

volved in pension administration in Nigeria.

5. It will serve as a guide in solving the long-term problems of pension

administration in the University of Nigeria and in the public service

generally.

6. It will provide useful data base for future research in the area of pension

administration in Nigeria.

1.7 SCOPE AND LIMITATION OF THE STUDY

This work was limited to University of Nigeria as a Case Study within the

time frame ranging from 1990 – 2006. A lot of factors posed some limitations

to the work.

As a student and worker, there was a lot of time constraints to carrying out

this research. A lot of time had to be sacrificed during office hours to look for

pensioners and attend their meetings in order to distribute the questionnaire.9 of 108

1.7. SCOPE AND LIMITATION OF THE STUDY

Even when the retirees were found, the researcher was faced with the

problem of convincing most of them to fill the questionnaire, as many of

them were very reluctant and in some cases blatantly refused to accept the

questionnaire. It was such a difficult exercise that few hands were engaged

to assist in the administering and collation of information collected. It was

however, a worthwhile venture.

In other cases, many of the retirees refused to sign in the questionnaire

due to ignorance, anger and transfer of aggression as a result of ill-treatment

meted to them since their retirement.

Another problem encountered by the researcher was the problem of lo-

cating many of the retirees who had relocated to their villages and to other

urban areas. Many of them had died due to hardships and sufferings espe-

cially during the period 1998 to 2004 when they had to stay several months

without their pensions and many years without payments of their gratuities.

Such deceased retirees could not be reached to collect information from them;

and this further reduced the available sample size for the study.

10 of 108

Chapter 2

LITERATURE REVIEW & RESEARCH METHOD

2.1 Literature Review

2.1.1 CONCEPT OF PENSIONS

Encyclopedia Americana Vol. 21, 19 defines Pension as a periodic income or

annuity payment made at or after retirement to an employee who has become

eligible for benefits through age, earnings and service. Benefits may also be

paid in the event of death, total disability or job termination. Payments are

usually in monthly installments.

World Book (2004: 15), defines pension as a form of income that workers

or their spouse receive after the workers retire, become disabled or die. Pen-

sion plans benefit people who had careers in private industry, in a nations

armed forces; or in national, state and local governments. In the United

2.1. LITERATURE REVIEW

States of America, about half the privately employed people, and nearly all

US government employees are covered by some type of employer sponsored

pension plan. In addition, a government program commonly known as Social

Security provides pension benefits to most United States workers after they

retire. Workers in the countries also are covered by Pension Systems.

The US government administers four major types of pension plan namely

1. Social Security

2. Railroad Pensions

3. Military Pensions and

4. Federal Civilian Pensions

Social security is the largest retirement income programe in the country.

It is managed by a government agency known as the Social Security Admin-

istration. Employees pay part of their salaries to social Security through the

Federal Insurance Contributions Act (FICA) payroll tax. Employers, on the

other hand, contribute the same amounts paid by their employees. Most self

employed workers pay part of their earnings to the program. For example,

in Italy, self employed workers contribute a percentage of their income to the

pensions scheme of the country, from where they will draw their pensions12 of 108


when they retire from active service. Eligible people who retire at age 65 or

older may get full social security benefits for the rest of their lives. Those

retiring between 62 and 65 receive reduced benefits. For example at age 62,

people are eligible for 80 percent of their full benefits. The social security

program was established in 1935. Since then, the number of beneficiaries has

continued to increase. Railroad Pension provides for retirement income for

railroad workers who retire from service.

The military pension and the Federal civilian pension share many things

in common with two pensions scheme discussed above and will not be further

discussed.

Pension has been described as a periodic income or an annuity payment

made at or after retirement to an employee who has become eligible for bene-

fits through age, earnings, and length of service (Ozor, 1999:142). Payments

are usually in monthly installments. .

In most firms of any size, there is a properly structured pension scheme,

and all employees (or all members of given classes of them) are required to

join it. In return, each employee is guaranteed a pension (and, often, other

benefits also) if he/she works for the organization until retirement.

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2.1.2 Pension Plans

Pension plans may be identified according to contributory or non-contributory;

fixed or variable benefit; group or individual, insured or trustee, private or

public and single or multi-employee. In many advanced countries of the

world, income from pension to an individual may be supplemented by social

security benefits, which apply to all citizens of the country, whether or not

they belong to the working class.

Some schemes are non-contributory (as in the civil service) while others

are. In contributory schemes, the employers contribution is supplemented by

the employees contribution deducted from salary.

Compulsory pension scheme is funded by accumulating a portfolio of in-

vestments from whose income and sale proceeds the money is found to pay

the pension in due course. In order to safeguard the fund in the event of

business failure, the pension scheme is as a rule externally funded. This is

done, either by setting up, as a separate entity, a pension fund administered

by trustees, or by paying into a scheme operated by an independent corpora-

tion, which guarantees agreed benefits to employees in return for stipulated

contributions of the company. The accounting methods of pension schemes

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are based on those of life assurance companies.

In the public sector of Nigeria, the pensions are non-contributory, and

Pension Act 1979 as amended, consolidated all enactments dealing with pen-

sions, war pension and disability benefits and gratuities for civilian employees

in the public service of the Federation.

A pension plan for workers is usually written and communicated to all

interested employees. Also, death, disability and termination benefits must

be indicated so that those who are employed in any organizations would be

knowledgeable of what their entitlements should be when they are disengag-

ing from service. There are various gradations for granting and calculating

pensions in Nigeria, but in most cases, they depend on the length of service

or age or both.

Retirement benefits are usually in two parts: Gratuity and Pension. Gra-

tuity is a lump sum of money paid to an employee on retirement, upon

death, or retrenchment or on total incapacitation while at work. In some

cases, workers are only entitled to gratuity upon withdrawal from service. In

other words, 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 organization at the time

15 of 108


of retirement, he is still qualified unless he was specifically dismissed without

benefits based on gross misconduct. Pension is a retirement benefit paid to

a worker after disengaging from an organization or as a result of death, total

disability and/or invalidism or termination of job or retrenchment. A worker

is only qualified for pension if he has worked for at least five years in an

establishment as stipulated by the Pension Scheme of such an organization.

Ozor (1999: ) further observes that:

In order to encourage retirement of aged employees, a retirement

benefit plan provides for income that were adequate to maintain the

retired worker and his dependents on a standard of living reasonably

consistent with that which he enjoyed during the years immediately

prior to retirement. Retirement benefits may be a flat amount for

all retirees on a specified function of earnings and service of both.

2.1.3 CONDITIONS FOR PENSION AND GRATUITY

According to the Pension Act of 1979, Pension and Gratuity shall be granted

to any officer in any of the following circumstances:

1. On voluntary retirement after qualifying service of ten years up to 31st

March 1977, fifteen years as from 1st April 1977, and 10 years as from16 of 108


1st June 1992.

2. On compulsory retirement at the age of 60 years and 35 years service,

whichever is earlier.

3. On compulsory retirement for the purpose of facilitating improvement

in the organization of the officers department or ministry so that greater

efficiency or economy may be effected;

4. On the advice of a properly constituted medical board certifying that

the officer is no longer mentally or physically capable of carrying out the

functions of the office;

5. On total or permanent disablement while in the service

6. On abolition of his office as a result of a re-organization in the depart-

ment and he cannot be transferred to another office g) If he is required by

the public service commission of the Federation to retire on the ground

that his retirement is in the public interest h) To take up appointment

in a local government or as a member or head thereof with the prior

consent of the minister, if the minister is satisfied that such retirement

is in the public interest. Where an officer retires after 1st June, 1992

pursuant to conditions (a) (h) above: i)if he has completed 5 years but17 of 108


not up to 10 years service, he shall be entitled only to a gratuity. ii)If

he has served for not less than 10 years, he shall be entitled to pension.

iii)If he is required to retire after 10 years qualifying service pursuant

to the provision of paragraphs (c) to (h) above, he shall be entitled to

pensions immediately on retirement, notwithstanding that he has not

attained the age of 45 years (as quoted in Johnson: 1992: 99 100).

2.1.4 HISTORY OF PENSIONS ADMINISTRATION IN NIGE-

RIA

The first pension legislation in Nigeria was enacted in 1951 by the British

colonial administration, which was known as the Pension Ordinance with

retrospective effect from 1st January 1946. The Pension which was initially

designed for colonial officers who moved from one post to another in the

large British Empire was to ensure their continuity of service wherever and

whenever they were deployed to serve the colonial administration. Pension

was therefore not a prerogative for Nigerians under the ordinance. However,

when the law eventually became applicable to Nigerians, the Governor Gen-

eral had to use his discretion. In order to redress this, a new Pension Act

was enacted in 1979; retroactively effective from 1st April, 1974. The Act

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consolidated all enactments on Pensions and incorporated pensions and gra-

tuity scales designed for public officers by the Udorji Public service Review

Commission in 1974. It also became the basic pension law from which other

pension laws in the public service of Nigeria emerged.

On the other hand, the regulated Private Sector Pension Scheme in Nigeria

began in 1961 with the establishment of the National Provident Fund (NPF),

which was, established by an Act of Parliament in 1961. Its main purpose

was to provide income loss protection for employees as required by the Inter-

national Labour Organization (ILO), Social Security (Minimum Standards)

convention 102 of 1952. The scheme, however, covered only employees in the

private sector, and the monthly contribution was 6% of basic salary subject

to a maximum of N8.00 to be contributed in equal proportion of N4.00 each

by the employer and the employee.

In 1993 the National provident Fund (NPF) was converted to a Limited

Social Insurance Scheme, administered by the Nigeria Social Insurance Trust

Fund (NSITF) via Decree No. 73 of 1993 effective from 1st July, 1994. The

NSITF was a defined benefits scheme and covered employees in the private

sector working for organizations with a workforce by not less than 5 employ-

ees. The initial monthly contribution of members was 7.5% of basic salary,

19 of 108


which was shared in the proportion of 2.5% by the employee, and 5% by

the employer, but was later revised in 2000 to 10% of gross salary (compris-

ing basic salary, transport and housing allowances) shared in proportion of

3.5% by the employee and 6.5% by the employers. In 2004, the Federal Gov-

ernment under President Olusegun Obasanjo, revolutionized Pension Man-

agement and administration in Nigeria, with the enactment of the Pension

Reform Act 2004. The Act assigned the administration, management and

custody of Pension Funds to private sector companies known as the Pension

Fund Administrators (PFA) and the Pension Fund Custodians (PFC). The

Act further mandated the Nigeria social Insurance Trust Fund (NSITF) to

set up its own Pension Fund Administrator (PFA) to compete with other

PFAs in the emerging Pensions industry, and also to manage the accumu-

lated Pension Funds of Current NSITF contributors for a transitional period

of five years. In response to the demands of the Act on NSITF that Trust

Fund Pensions PLC was incorporated by the NSITF, in collaboration with

other institutional investors and social partners as a Pension Fund Admin-

istrator, in accordance with the provisions of the Act. The sole business of

Trust Fund Pension PLC is the administration and management of retire-

ment savings (Pension Funds). However, in spite of the humble beginning,

20 of 108


inadequate funding and low compliance level, the Nigeria Social Insurance

Trust Fund, grew significantly in every area of its operations from 1967 to

2004.

In spite of Pension Acts, there have been various circulars guiding the

administration and regulations of Pensions in the public service which are

issued from time to time to update previous ones.

2.1.5 REGULATIONS GUIDING THE ADMINISTRATION OF

PENSION AND GRATUITY IN NIGERIA

The first Pension Ordinance was enacted by the colonial masters in 1951

and had retrospective effect from the 1st January 1946, mostly to cater for

the British who were posted to serve in the colony. The colonial pension

law made granting of pension to Nigerians at the discretion of the Governor

General of the country. Pension then, was not automatic to retirees. Under

the 1951 ordinance, pension could be withheld or denied to an officer at the

slightest excuse of negligence or misconduct.

After independence, the federal government in an attempt to exercise ex-

clusive power over pension matters enacted the pensions Decree No 102 of

1979 with retrospective data of 1st April, 1974. The Decree consolidated

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all pension enactments and incorporated the pensions and gratuity scales for

public officers revised by The Udoji Public Service Review Commission. The

Decree No 102 of 1979 is the basic pension laws from which other pension

laws in the public service of Nigeria have developed. As the need arises, other

laws which cater for specific professions or groups are enacted but still the

main features of Decree 102 of 1979 are retained.

In spite of government efforts in enacting well articulated provision in the

Decree No 102 of 1979 with its subsequent amendment, which could have

made public servants confident in a well provided retirement for them, made

it unattainable due to inadequate funds to meet future bill, consequently,

it has become a serious concern to government and workers in the last few

years. The issue of funding pension bill is not peculiar to Nigeria alone, it is

a global phenomenon. In Nigeria, there was a time money was not a problem

but how to spend it, a declaration made by one of the past military Heads

of State of Nigeria, Government budget then could comfortably absorb the

pension bill. For example, in the 1990s, the Universities were able to pay

pension and gratuity to its retirees before asking for reimbursement from

government, but at present, the increased number of retirees which has more

than tripled the figure in the 1990s coupled with the reduction of subvention

22 of 108


to the Universities, it has therefore become very difficult for Universities to

pay and request for reimbursement.

This was the genesis of having retirees staying for several months (or even

years in some Universities) without collecting retirement benefits. This in-

crease in the number of retiring public officers and the inability to pay their

entitlements as at when due, certainly shows that the government was no

longer prepared to meet its financial obligations in this regard. The dwin-

dling economy of the nation since 1980s was a contributory factor to this

phenomenon. In view of these emerging problems, the government had to

engage in series of consultations to find funding solutions for retirees bene-

fits. This scenario culminated in series of workshops organized by the Office

of the Head of Service of the Federation in which government brought crown

Agents of United Kingdom and all stake holders to deliberate on the problem

of funding and administration of the public service pension with a view to

reforming it. This subject was extensively discussed at the workshop titled

“Pension Reform: A New Approach to pension Regime in Nigeria“. The

workshop amongst other things discussed extensively on a new approach to

financing the public service pension scheme and investment of pension funds.

It advocated for contributory pension scheme which government had adopted

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when it has become clear that with the dwindling economic fortunes of federal

and state government and the increasing number of retirees, coupled with the

increased needs of other social needs and infrastructural development of the

country, it therefore, has become almost impossible for government to meet

retirees benefits. The workshop came out with various recommendations

amongst which was the adoption of the globally used contributory scheme

for the entire public service where employees are to contribute a part of the

cost of providing retirement benefits and the merging of both public and pri-

vate sector pension scheme. This recommendation had gone through series

of debates; involving the Insurance Organizations Nigeria Labour Congress

(NLC) and other Stakeholders. The passage of the bill and the guidelines for

implementation came into place in June 2004. This would, however, be the

first fundamental review of the Pension Decree No. 102 of 1979. The 2004

Pension Act repealed all the existing pension laws in Nigeria and had become

operational since 2005. It is expected that the contributory scheme would

provide funds to pay retirement benefit and also provide funds for growth

and development of the economy in the long run.

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2.1.6 PROBLEMS OF PENSION ADMINISTRATION IN NIGE-

RIA

There has been a lot of problems associated with pension schemes in Nigeria.

The Public service operates an unfunded Defined Benefits Scheme and the

payment of retirement benefits are budgeted annually. The annual budgetary

allocation for pension has been one of the most vulnerable items in budget

implementation in the light of resource constraints. Indeed, even where bud-

getary provisions are made, inadequate and untimely release of funds result in

delays and accumulation of arrears of pension and gratuities of retired work-

ers. As the scheme is unfunded, there is no opportunity for the accumulation

of investible funds. Even in cases, where funds were accumulated under some

parastatals schemes, restrictive investment policies and practices sometimes

have limited the capacity of such funds to grow. Also, political instability

and unstable labour policies in the past had endangered massive premature

retirements, thus creating an unstable pension-to-active-worker ratio.

Furthermore, poor administration, inadequate delivery structures for pay-

ment and lack of a database of pensions have resulted in delayed payment

of benefits and consequent near destitution of pensioner, adverse publicity in

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the media and portrayal of the government and the society as uncaring to

the plight of its senior citizens (the pet name for retirees). However, such

inherent problems of the past pension scheme in the country have resulted

in a lot of insecurity and seemed to have encouraged high level corruption

in the active workforce. In the last few years, a number of pension reviews

have been carried out by the Federal Government. These reviews which ad-

justed pensions and gratuity of retirees upwards without provision of funds to

back them up is another major problem of pension administration in Nigeria.

Prior to the commencement of the new pension scheme in 2004, an estimated

outstanding pension liabilities nation wide rose to the tune of N2 trillion,

consequently, defined Benefits Pension Scheme cannot be sustained.

The management of Pension Scheme in Nigeria is inundated with multiple

and diverse problems. One major problem is the lack of adequate funding.

Government parastatals and institutions have not succeeded in setting aside

the recommended 25% for pension scheme from the total emolument of their

employees due to insufficient funds. The subventions and grants received

from government are sometimes inadequate to meet recurrent expenditure

and overhead costs; not to talk of having some reserve for pension liabilities.

Another problem is the problem of documentation and filing of pension of-

26 of 108


fices. Some retirees in the university fail to comply with the procedures for

clearance, possibly due to the cumbersome nature of it. In some cases, some

retirees would blatantly refuse to fill the clearance forms prior to retirement.

This creates a lot of problem for the pension office and often result in delay

in the processing and payment of their entitlements. The filing system in

most pension offices in the country is very chaotic. In most cases, files are

poorly handled, sometimes misplaced, abandoned in the open, leading to loss

of documents and in very bad condition. Subsequently, relevant information

on the affected retirees are lost by the pension office.

Incompetent and inexperienced pension staff with no relevant training

is another problem facing the management of pension scheme in Nigeria.

This is further aggravated by their poor human relations, lack of etiquette

and simple courtesy expected of public servants. There is also the problem

of wrong calculations and computations of gratuity and pension, as well as

omissions of some retirees from the list. Many pensioners are dissatisfied with

the calculations of their entitlements which they allege are wrongly computed.

This results in continuous petitions and appeals for recalculations and proper

computations of gratuity and pension from pensioner. There is lack of IT

facilities used in storing pension records. The fact that many of the pension

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records are not computerized is a major problem. Hence, there is lack of

database on pension matters. The manual system is not just cumbersome

but loaded with all sorts of frauds and errors such as ghost pensioners, double

payments and omission of names.

Frequent reviews of pension schemes by the federal government without

consulting state government and other stakeholders constitutes another ma-

jor problem. The frequent reviews have caused implementation problems

such as inability to secure sufficient funds to meet current rates. The strate-

gic method of rationalization and downsizing of personnel in the public sector

aimed at reducing operating costs, labour cost and promote efficiency poses

another problem. The consequence here is that the cost of paying retire-

ment and pension benefits are higher than the costs of retaining them. The

Contributory Pension Scheme was established by Pension Reform Act 2004,

which came into effect in June 2004.

2.1.7 Rationale for the Reforms

Most schemes were underfunded or unfunded and were plagued with unsus-

tainable outstanding pension liabilities and weak and inefficient administra-

tion. The administrative structure of the past pension schemes was weak and

28 of 108


inefficient, especially in the following respects:

1. Demographic shifts and aging made defined benefit scheme unsustain-

able

2. Most workers in the private sector were not covered by any form of re-

tirement benefit arrangements. The need therefore to incorporate them

was quite imperative.

3. The past pension schemes focused more on the workers in the public

sector without any reference to those in the private sector.

4. Private sector schemes that existed were resignation rather than retire-

ment schemes.

Total membership of the scheme as at April 2007 is 2.2 million consisting

of 73.16% from public sector and 26.84% from private sector. The total

estimated workforce in Nigeria as at December, 2006 was 49.0million, out of

which 3.52 million public sector of which 48.8% have registered; 4.7 million

formal private sector, out of which 11.5% have registered and 40.8million

informal sector, out of which non has registered. About 20 state governments

are at various levels of implementation.

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2.1.8 THE CONTRIBUTORY PENSION SCHEME

As is typical world wide, the pay as you go defined benefit scheme that op-

erated in Nigeria for more than a decade, was saddled with a lot of problem

and has increasingly become unsustainable. The key objectives of the new

scheme include the following, to:

1. Ensure that every person who has worked in either the public or private

sector receives his retirement benefits as and when due.

2. Assist improvident individuals by ensuring that they save to cater for

their livelihood during old age.

3. Establish a uniform set of rules and payment of retirement benefits in

both the public and private sectors and .

4. Stem the growth of outstanding pension liabilities.

2.1.9 ELEMENTS OF THE NEW CONTRIBUTORY PENSION

SCHEME

The new pension 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 Assets Custodians.30 of 108


CONTRIBUTORY SYSTEM

Under the contributory pension system, the employees contribute a minimum

of 7.5% of their monthly Emoluments (Basic salary, Housing and transport

Allowances) but the military contribute 2.5%, while the Employers contribute

12.5% in the case of the military. Employers and employees contribute a min-

imum of 7.5% each of the monthly emoluments. An Employer may decide to

contribute on behalf of the employers such that the total contribution shall

not be less than 15% of the monthly emolument of the employees. An em-

ployee is obliged to deduct and remit contributions to a custodian within 7

days from the day the employee is paid his salary while the custodian shall

notify the PFA within 24 hours of the receipt of contribution. Contribution

and retirement benefits are tax-exempt. The contributions are deducted im-

mediately from the salary of the individual worker and transferred to the

relevant retirement savings account. By so doing, the pension funds exist

from the on set and payments were made as at when due. The employee is

required to open an account known as Retirement Savings Account (RSA) in

his name with a Pension Fund Administrator of his choice. This individual

account belongs to the employee and will remain with him through life. The

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worker may change employers or pension fund administrators but the account

remains the same.

The employee may only withdraw from this account at the age of 50 or

upon retirement thereafter. An employee can withdraw a lump sum from

the balance standing to the credit of his retirement savings account: after

the lump sum withdrawal shall be sufficient to procure an annuity or fund

programmed withdrawal that will produce an amount not less than 50% of

his monthly remuneration as at date of his retirement. The balance after

lump sum payment can be applied in any of the following:

• A programmed monthly or quarterly withdrawal, and

• A purchase of annuity for life through a licensed life Insurance Company

with monthly or quarterly payment;

With any of the above options, there is an assurance that the pensioner

has sufficient funds available to him for his old age. Although many have

contended that at the end of the working period, they should be allowed

to collect their savings in one lump sum. Experience has shown that very

few individuals have the discipline to manage funds effectively over a long

period of time. The above was considered a better process than to allow the

32 of 108


individual withdraw his accumulated savings at once, spend it all and then

have no income when he is no longer in a position to work. It is expected that

every employer shall maintain life insurance policy in favour of an employee

for a minimum of three times the annual emolument of the employee.

The PFAs are licensed not only to manage retirement savings accounts; but

also to manage investment and ensure superior return without compounding

the security liquidity of assets.

PENSION FUNDS ADMINISTRATORS

The new pension scheme required pension funds to be privately managed by

Pension Funds Administrators and Pension Fund Custodian. The Pension

Funds Administrators (PFAs) are duely licensed to open retirement savings

accounts for employees, invest and manage the pension funds in a manner as

the Commission may from time to time prescribe, maintain books of accounts

on all transaction relating to the pension fund managed by it, provide regular

information to the employees or beneficiaries and pay retirement benefits

to employees in accordance with the provisions of the pension Reform Act

2004. The PFA, before an operating license is issued, must be a limited

liability company whose sole object is the management of pension funds.

33 of 108


In order to discourage frivolous applications and to ensure credibility, such

company must have a paid up share capital of N= 150,000,000 and demonstrate

professional capacity to manage pension funds and administer retirement

benefits.

PENSION ASSETS CUSTODIANS (PACs)

The Pension Assets Custodians were responsible for the warehousing of the

pension fund assets. The PFA shall not be allowed to hold the pension funds

assets. The employer send the contributions directly to the custodians who

notifies the PFA of the receipt of the contribution and the PFA subsequently

credits the retirement savings account of the employee. The custodian will

execute transactions and undertake activities relating to the administration

of pension fund investments upon instruction by the PFA. Before it is issued

with an operating license, the pension Assets custodian must be a limited

liability company incorporated under the company and Allied Matters Act

and a licensed financial institution. The custodian shall hold pension fund

assets on trust for its clients. For the same reason adduced in the case of the

PFA, the custodian must have a minimum net worth of N= 500,000,000 and

a total balance sheet of not below N= 125,000,000,000. The shareholders of a

34 of 108


custodian must guarantee the pension fund assets held by it.

THE NATIONAL PENSION COMMISSION

The Act has established the National Pension Commission (PENCOM), for

effective administration of pension matters in Nigeria. The Commission is a

regulatory and supervisory body over all pension matters in Nigeria.

The PENCOM ensures that payment and remittance of contributions are

made and beneficiaries of retirement savings accounts are paid as at when

due. Above all, the commission will ensure the safety of the pension funds

by issuing guidelines for licensing, approving, regulating and monitoring the

investment activities of pension funds administrators and custodian. Under

the contributory pension scheme, the National Pension Commission as the

regulator of pension matters shall receive and investigate any complaint of

impropriety leveled against any pension fund administrator, custodian or

employer or any of their staff or agents. Basically, the Commission stands

as a watch dog, with the overriding objective of ensuring that all pension

matters are administered with minimum exposure to fraud and risks. The

commission will employ the use of approved risk rating agencies to determine

the viability of an investment instrument.

35 of 108


ELIGIBILITY FOR THE SCHEME

The law makes it mandatory for all workers in the public service of the Federa-

tion and the Federal Capital Territory and workers in the private sector where

the total numbers of employees is 5 or more to participate in the scheme. It

is important to note that the regulators and operators can not on their own

make the system work without the employees who are the consumers in this

case signing up as contributions and trusting the system.

INDIVIDUALS EXEMPTED FROM THE SCHEME

Existing pensioners and workers who have 3 years or less to retire in accor-

dance with the terms of their contract of employment are exempted from the

scheme. Also, exempted are the categories of persons under section 291 of

the constitution of the Federal Republic of Nigeria. However, they may join

of their own volition.

REPORTING REQUIREMENT FOR PFAs

In order to keep track of their activities, the PFA is required to make a regular

report of its activities to the commission. Although many may consider this

an onerous requirement by the Commission, but in view of the volume and

36 of 108


nature of the funds the PFAS will handle, it becomes necessary to be able to

sport any problem early. Besides, this information is expected to be passed

on to the commission electronically and would not constitute a hardship for

any fully automated PFA.

PFAs and custodian shall be required to disclose their rate on return and

published their audited accounts. All retirement saving account holders who

have contributed for not less than 20 years shall be entitled to a guaranteed

minimum pension as may be specified by the Government on the recommen-

dation of the commission.

BENEFITS OF THE CONTRIBUTORY PENSION SCHEME

Nigeria stands to benefit from the new pension scheme. In the first instance,

it addresses the pension liability by stemming its further growth and pro-

vides a platform for addressing this liability. Since the individuals own the

contribution, the pensioner is no longer at the mercy of the government and

is assured of prompt payment of retirement benefits. Employee has up to

date information on his retirement, savings accounts. The scheme allows the

contributor the freedom to choose who administers his retirement benefits

accounts and this promotes competition among the PFAs. A major benefit

37 of 108


of the new scheme to the worker is that the individual accounts are portable

and as such , the worker is able to change employment and still maintain the

same accounts. He is merely required to provide the details of his account to

the new employer. The scheme imposed fiscal discipline on the nation and

is a solid foundation for economic development. There is an expansion of

convertible funds, creation of a huge pool of long term funds, and enhanced

accountability. The scheme introduces clear legal and administrative sanc-

tions and there is a separation of investment, administration and custody of

assets. Transparency is also ensured by the requirements for published rate of

returns, regular statements of contributions and earning and annual audited

accounts.

Employees in the private sector who hither to are not considered for pen-

sion, are beneficiaries of the contributory pension scheme for any new em-

ployees who join the service after 15th June, 2004.

Criticisms of the Scheme

While the Contributory Pension Scheme has been applauded by many, it has

also received a lot of criticism from some quarters. The first of such criticism

is on the issue of age. To state that an employee who retires under the age

38 of 108


of 50 years can not enjoy the fruit of his hard labour as this Act provides, is

considered most cruel by some critics. Some others opine that to engage an

employee against his will or wish indirectly through out his most productive

life until he would no longer be much useful to himself on leaving service can

not be qualified by any better word than slavery.

To further perfect this slave condition, some argue, the Act extinguished

the statutory provision of 35 years of service or 60 years of age which ever

is earlier contained in the previous Act and which ensured job security in

the public service. This gives government opportunity to fire at will without

any legal remedy left for the employees to seek redress in law court against

premature or wrongful termination of appointment. The proof of the fore-

going could be seen from the complete and obvious absence from this Act,

the 35 years of service or 60 years of age ( which ever come first) as provided

by the old pension Act. Furthermore, every doubt to this effect is removed

by the express provision under section 99 that the current Act repeals the

previous Act. Now, there is no length or age limitation to service but the

government can fire any employee at will thereby extinguishing job security

in public service.

This takes us back to the colonial era when public servant held their ap-

39 of 108


pointments at the pleasure of the crown, despite the present day international

charters ratified and the universal declaration of rights to work and earn a

living. Are we retrogressing or improving on our laws. According to Bob

Ojugoh (2005), it has been argued in some quarters that. the authors of the

Contributory Pension Scheme failed to point out or draw attention to the de-

mand and inadequacies of the Act to the workers of this nation. According to

him, these are government sponsored promoters that are still going round to

sell, promote and justify the government action against the workers but are

still hiding the inadequacies of the Act. This, he emphasizes, is most unfair.

He further opined that every thing should be looked at objectively in totality

via-a-vis the right of the employees/pensioners under the constitution. The

Nigeria Labour Congress (NLC) has cried out about the unfair nature of the

Act and how most other stakeholders views on the Act ( when it was a bill)

were ignored and jettisoned in favour of the government views which were

largely considered and passed by the National Assembly.

2.1.10 ADVANTAGES OF 2004 REVIEW PENSION ACT.

The new Pension scheme arising from the Act has the following advantages:

1. It provides cheap fund for investment in the country and thus boost

40 of 108


employment generation.

2. It reduces the burden of large payment of pension on government.

3. Employees are enabled to save more money for their welfare at old age

than was possible under the old Act.

2.1.11 IMPACT OF THE 2004 PENSION SCHEME ON THE

ECONOMY

The Pension Fund Assets have generated a pool of long term investible funds

for the first time in Nigeria. The industry has raised approximately N600

billion (USD 4.6 billion) worth of assets as at 31st March 2007. Out of the

assets N135.2 billion (USD 1.0 billion) are new contributions and N464.8 bil-

lion (USD 3.6 billion) are transferred by legacy funds. The pension scheme

has created domestic institutional investors (i.e. PFAs). There is a shift

of financial assets to the capital market. Also formalized pension opera-

tors/institutions investors promote competition in the securities market. The

scheme created the need for further capital market reforms especially in re-

duction of charges and transaction fees. Long term savings are available to

finance the real sector and sustain the growth of the economy. The scheme

has created employment opportunities for the teeming unemployed univer-41 of 108

2.2. GAPS IN LITERATURE

sity graduates. About 3,000 Nigerians have been directly employed into the

pensions industry. The scheme has also created opportunities for many third

party service providers.

2.1.12 BENEFITS FOR THE NIGERIAN WORKER

The Scheme provides the following benefits for the Nigerian worker:

1. Guaranteed Retirement Benefits

2. Improved Savings Culture

3. Introduction of multiple funds will allow the worker the choice of fund

that meets his/her risk appetite.

4. Provides funds for developments in other sectors (such as mortgage in-

dustry) which the worker can benefit from.

2.2 GAPS IN LITERATURE

As the popular saying goes A tree does not make a forest and Nobody exists in

an Island. In the same way, no knowledge exists on its own without a source.

From the literature review, it was discovered that a lot of work and literature

has been available on Retirement, retirement benefits and Pension Adminis-

42 of 108

2.3. HYPOTHESES

tration for some decades now; but not much has been done on the problems of

Pension Administration with a Case Study of University of Nigeria, Nsukka

(1990 -- 2006). The research believed and hoped that more work would be

done on this topic using other Universities and governmental Institutions as

Case Studies.

2.3 Hypotheses

The following hypotheses have been developed to guide the conduct of the

study:

1. The administration of pension and gratuity has been characterised by

undue delays.

2. These delays are due to ineffective or poor management principles adopted

in pension administration.

3. Pensioners experience grave difficulties in processing their pension ben-

efits.

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2.4. KEY CONCEPTS

2.4 Operationalization of key concepts in the hypothe-

ses

The following key concepts found in this work are outlined and discussed

below:

Retirement benefits These are usually classified into two parts; namely

pension and gratuity.

PENSION refers to the monthly payment to a worker by his employer

after he (employee) has disengaged from active service of the orga-

nization.

GRATUITY : is a lump sum or cumulative payment calculated on

the basis of previous earning and years of service which is paid to a

worker upon disengagement from active service by his employer.

PENSION ADMINISTRATION Pension Administration includes all the

processes involved in managing pension funds by Pension Fund Admin-

istrators (PFA) and Pension Fund Custodians to ensure that the overall

aim of helping individuals to save part of their earning during working

life is achieved and are made available to them after retirement in the

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2.4. KEY CONCEPTS

form of pension and gratuity.

PENSION FUND ADMINISTRATORS (PFAs) These are financial in-

stitutions licensed to open Retirement Savings Account (RSA) for em-

ployees, invest and manage the pension funds in fixed income securities

and other instruments as the Commission may from time to time pre-

scribe.

PENSION FUND CUSTODIANS (PFA) Pension Fund Custodians are

Institutions responsible for the warehousing of the Pension Fund Assets.

The employee sends the contribution directly to the custodian, who no-

tifies the PFA of the receipt of the contribution and subsequently the

PFA credits the retirement savings account of the employee.

RETIREMENT SAVINGS ACCOUNT (RSA) This is an account which

is opened by the Pension Fund Administrator for the employee. This

account belongs to the employee and will remain with him throughout

his lifetime. Even if the employee changes employment or Pension Fund

Administrator, his retirement savings account remains the same. The

contributions made by the employee are lodged into this account. The

employee can only make withdrawals from this account at the age of 50

45 of 108

2.4. KEY CONCEPTS

or upon retirement. Before the Contributory Pension Act was passed

into law in 2004, the government was deducting the pensions from the

source and paid directly to the institution that was managing the funds.

PENSION ACT: This refers to the set of rules and regulations approved

and passed into law by the National Assembly regarding the operations

of pension matters in the nation.

PENCOM: Simply means Pension Commission. This is a supervisory body

which serves as a watchdog to ensure that the approved pension Act are

properly implemented by the institutions concerned.

RETIREMENT: refers to disengagement of a worker from active service.

This disengagement could be voluntary or non-voluntary. The retire-

ment may be due to age or based on length of service which is 35 years

in the public service except for University academic staff or those in

judiciary that exceed 60 years as retirement age.

CONTRIBUTORY PENSION: This is the type of pension in which the

employer and the employee contribute a certain percentage as pension

of the worker while in service. In Nigeria, for instance, each individual

worker in the public service contributes 7.5% of his monthly earnings

46 of 108

2.5. METHODOLOGY

while the government contributes 7.5% to the pension scheme of each

employee. This type of pension scheme has been operational for decades

in several countries of Europe and America.

NON-CONTRIBUTORY: This type of pension is such that government

contributes a certain amount as the pension of each employee. The

worker does not contribute anything to the pension fund. This was the

type of pension which Nigeria operated for decades until 2004 when the

Federal Government had no alternative than to introduce the contribu-

tory pension scheme which includes employees in the private sector with

a minimum of five workers.

2.5 METHODOLOGY

In order to adequately address all the issues involved in this study, we shall

first of all consider a number of theories or tools in subsection 2.5.1 (theoret-

ical frame work). This will then be followed by a detailed discussion of the

methods employed for the data collection and data analysis.

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2.5. METHODOLOGY

2.5.1 Theoretical Framework

Theory is very important because, as the symbolic representation of the real,

it enables people to communicate quickly and effectively. According to Nwizu

(1999:1) as quoted in Ezeani (2005:99) theory acts as a guide to action, to

collect facts, to explore the new knowledge and to explain the phenomena

that are being examined. It aids in the identification and certification of

problems. The importance of theory in public administration cannot be over-

emphasized. McGregor (1966) observes that:

Every management act rests on assumption, generalizations and hy-

potheses, that is to say, on theory. Our assumptions are frequently

implicit — theory and practice are inseparable.

Bailey (1968:129) as quoted in Ezeani (2005:100) commenting on the ob-

jectives of public administration theory states that:

The objectives of public administration theory are to draw together

the insights of the humanities and the validated propositions of the

social and behavioral sciences and to apply these insights and propo-

sition to the tasks of improving the processes of government aimed at

achieving politically legitimated goals by constitutionally mandated

48 of 108

2.5. METHODOLOGY

means.

It is against this background that the researcher resolved to adopt the

Administrative Management theory of Henri Fayol (1841 1925) as the theo-

retical framework of analysis for this work. Fayol was a French industrialist

whose famous work entitled Administration industrialle et Generale was first

published in 1916. The work was later translated into English in 1929. The

first English translation was published in the United States in 1949 with the

title General and industrial Management. Henri Fayol in his view, classified

industrial activities into six (6) categories, including the following:.

1. technical (production)

2. commercial ( buying, selling and exchange)

3. financial (search for and optimum use of capital).

The seventh principle of this Administrative theory referred to as Remu-

neration of personnel would be discussed with relevance to this work. Ac-

cording to this principle, the remuneration of the personnel should not only

be fair but also afford the satisfaction of both the employee and employer.

Therefore, the payment system should be fair and not exploitative and they

should be rewarded for good performance. There should be fixed acceptable49 of 108

2.5. METHODOLOGY

mode of payment so as to exercise substantial influences on business progress.

In modern management of organization, this principle is still adopted and

managers have evolved an equitable methods of calculating wages, salaries

and fringe benefit of workers. A variety of modes of payment such as fine

job and piece-rates, bonuses, profit-sharing and non-financial rewards can be

used. If workers are properly remunerated, they would definitely give their

best service to the organization that employed them.

Pension and gratuity are retirement benefits paid to a worker who disen-

gages from active work within an organization. While pension is made to

the retiree periodically for a duration of time after retirement, gratuity is

lump sum payment upon disengagement from service to the retired worker.

Payments are remuneration to a retired worker after several years of service

ranging from 5 five to 35 years or more. The worker expects to receive these

payments from the organization he or she had worked for. It is therefore

expected that the organization either public or private where the retiree(s)

had worked should be fair and not be exploitative in giving this reward that

is accrued to the retiree. Where the organizaation fails to maintain their

obligation to the retired worker, it poses a problem both to the employer or

organization and the former employee who is now retired. It is this scenario

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2.5. METHODOLOGY

of non- commitment to obligations made to the worker on assumption of

duty, when he retires, that makes this study quite imperative.

In Nigeria, pensions and non commitment of government to its payments

to retired workers had posed a lot of problem and untold hardships on the

retirees. The subject of pension is a highly emotional phenomenon which

affects all levels of workers whether public sector or private sector employees,

old or young. It is a subject that should also interest employers, whether

government or non governmental public sector or private sector. An employee

who is not assured of his survival after retirement is most likely to reserve

a better part of his natural endowment in guaranteeing that than in serving

the employer. The employer is the worse for this, as the cost of his ensuring

that the fears of the employee in this regard is allayed is lower than the

cost of sustaining an ill-motivated, corrupt and undedicated worker in an

organization.

4. Security (protection of property and persons),

5. Accounting (Including statistics); and

6. Management (planning, organization, command coordination and con-

trol) (Koontz et al, 1983: 46) as quoted in (Ezeani, 2005: 110). Fayol

51 of 108

2.5. METHODOLOGY

opined that these activities exist in businesses of every size. He ac-

knowledged the importance of all the activities but observed that the

first five are well known, and therefore decided to concentrate his writ-

ings on managerial aspects of organization, which in his thinking is a

virgin area that needs to be explored.

In his book, General industrial management, Fayol reviewed fourteen (14)

principles of management which he believes should be applied in any organi-

zation if maximum efficiency is to be achieved. He observed that, principles

are flexible and capable of adaptation to every need, it is a matter of knowing

how to make use of them, which is a difficult art requiring intelligence expe-

rience, decision and proportion. The principle developed by Fayol (1949:19

– 42) are as follows:

1. Division of work

2. Authority

3. Discipline

4. Unity of command

5. Unity of direction

52 of 108

2.5. METHODOLOGY

6. Subordination of individual interest to the General chain (line Author-

ity).

7. Order

8. Equity

9. Stability of tenure of personnel

10. Initiative

11. Espiri de corps

Some of the elements of the theoretical framework are illustrated in fig-

ure 2.1. It shows that there is a complex interaction between the factors and

variables identified in the theoretical framework. For example, the govern-

ment makes the various pension laws and regulations which guide the work

of the pension administrators. In turn, these affect the pensioners and other

stakeholders. In the ideal case, there should be mutual interaction between

the different organs which should naturally lead to an improvement of the

pension system.

A detailed study of the nature of these interactions is beyond the scope of

the present study.

53 of 108

2.5. METHODOLOGY

PENSION LAWS/REGULATIONS

PENSIONERS/STAKE HOLDERS

PENSION ADMINISTRATORS

GOVERNMENT/LAW ENFORCEMENT

AGENCIES

Figure 2.1: Schematic representation of the conceptual framework

54 of 108

2.5. METHODOLOGY

2.5.2 Method of Data Collection

The methodology that follows is designed to obtain data/information on the

parameters and variables affecting pension administration in Nigeria using

the theoretical framework as guide.

The study adopted a multi-methodological approach to ensure the gener-

ation of extensive and reliable data and information. These methods are as

follows:

1. Field Survey Method

2. In-depth (oral) Interviews (key individuals)

3. Documents Content Analysis (Desk Research)

4. Stakeholders’ Interactive Sessions

Some details on these research methods are as follows:

The Field Survey

This essentially involved a systematic survey of retired staff of the Univer-

sity of Nigeria living in or visiting the area covered by the study using a

questionnaire (see Appendix A). The major aim here was to generate reliable

55 of 108

2.5. METHODOLOGY

quantitative data and information for handling the research questions. Infor-

mation requested include the date of first appointment and retirement of the

respondent, as well as the Department and post at retirement. The response

of the participant on twenty six (26) major issues are then sought using a

five-point Linkert scale. For question 1, the reason for retirement is requested

where one of the options is to be selected from (i) AGE (ii) LENGTH

OF SERVICE (iii) HEALTH (iv) VOLUNTARY RETIREMENT

(v) Others (specify) .

For all the other questions, one of the following is to be selected (i)

Strongly Disagree (ii) Disagree ( iii) Agree (iv) Strongly Agree

(v) Others (specify) .

The questions cover the respondents experiences with respect to the ad-

ministration of pensions and views on the new contributory pension scheme.

each question, as well as the analysis of the responses, is shown in section

4.2.2.

In-depth (Oral) Interview

This is an in-depth or intensive oral interview method which was used to

have one-on-one discussions with key individuals in the study population.

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2.5. METHODOLOGY

The instrument here is mainly an unstructured oral interview Guide (see Ap-

pendix B). This helped in generating experience and knowledge-based qual-

itative data and information from these carefully selected individuals. The

individuals interviewed include the Pensions Manager, University of Nigeria,

Nsukka.

Document Analysis

Preliminary information search that preceded this study, revealed that there

exists already many published and unpublished documents that contain very

useful data and information that need to be carefully collected. All relevant

available public and private documents in Nigeria were critically analysed to

glean from them the useful facts and figures needed to guide decisions and

actions. When necessary, Content Analysis was used for a systematic study

of some selected special documents, in order to also generate quantitative

data from these documents.

Stakeholders’ Interactive Session

To further generate useful data in this baseline study, intensive stakeholders’

Interactive Sessions were held with pensioners during their meetings. This is

important because a lot of useful oral and written data and information were57 of 108

2.5. METHODOLOGY

obtained in this way on many issues and problems that are directly related

to the topic under study.

Sources of Information and Data

Data and information were collected from two main sources, namely primary

and secondary data sources. Primary data sources are from the six methods of

data and information generation discussed in subsection 2.5.2 above (survey,

observation, Focus Group Discussion, etc). Secondary data were collected

from the following sources from available documents from the University

library, the internet, and any other documentary information which were

found useful.

Population of Interest

The population of this study consists of all retired staff of the University of

Nigeria living or visiting the study area during the period of data collection.

The University Pensions Office could not provide any estimate of the popu-

lation size. It was also not possible, within the available resources and time,

to undertake a special study to determine the population size.

58 of 108

2.5. METHODOLOGY

Sample Size and Sampling Technique

Careful observation has revealed that a good many of the retired staff of the

University of Nigeria live in and around Nsukka, while the rest settle in other

parts of the Federation but visit Nsukka occassionally. Because of this, all

pensioners of the University who could be contacted during the period of

field work constituted the sample for the study. Interaction sessions with the

pensioners during their meetins revealed that their number would be at least

five hundred (500). This was the taken as the sample size.

Data Collection Instruments

Based on the research methods proposed in section 2.5.2 above, the following

data collection instruments were designed and employed in the study:

1. A Structured Questionnaire (Appendix A)

2. An Unstructured Oral Interview Schedule (Appendix B)

The instruments shown in the Appendices are the final versions employed.

In general, preliminary versions of the instruments were first developed and

used in pilot studies before the final versions emerged.

59 of 108

2.5. METHODOLOGY

Method of Instrument Administration

The author, assisted by enumerators, personally administered the question-

naire and the other data collection instruments listed above. The enumerators

were trained on how to administer the instruments.

2.5.3 Method of Data Analysis

In order to ensure easy perusal and usage, the quantitative data generated

were analysed and presented in absolute and relative frequency tables, per-

centages, bar charts, histograms and pie charts, as and when appropriate.

The qualitative data generated were also analysed and presented in clear and

easily usable forms. Practical deductions, conclusions and recommendations

are then made, based on the analysed and presented data, to guide decisions

and actions of the implementers of the various pension schemes.

To undertake these tasks, all the questionnaire returned from the field

work were coded and the relevant data extracted and entered into a com-

puter spreadsheet using the Microsoft Excel Software.. To generate suitable

frequency tables, percentages, bar charts and histograms, it was noted that

for each sub-question in the structured questionnaire, there were five optional

responses on the Linkert scale as shown in table 2.1.

60 of 108

2.5. METHODOLOGY

Table 2.1: Linkert coding formular utilised

Code Response (questions 2 to 16) Response (question No 1 only)

1. Strongly disagree Age

2 Disagree Lenght of service

3 Agree Health

4 Strongly agree Voluntary retirement

5 Others (specify) Others (specify)Source: Field Survey, 2008

The responses were then coded from 1 to 5 as shown in table 2.1 and

stored electronically. A typical page of the data entry sheet is shown in table

2.2.

For each subquestion in the questionnaire, the number of respondents who

chose each of the options 1, 2, 3, 4, or 5 is determined, the total respondents

for that subquestion were calculated, and the appropriate percentages com-

puted. In order to handle the issues raised in the hypotheses section, the

data was further analysed using the Statistical Package for Social Sciences

(SPSS).

61 of 108

2.5. METHODOLOGY

Tab

le2.

2:A

typic

alpag

eof

the

dat

aen

try

shee

tS

ND

ate

Ap

-p

ointe

dD

ate

Re-

tire

dD

epar

tmen

tS

tatu

sQ

uest

ion

Nu

mb

er

12

34

56

7A7B

7C7D

7E8

910

1112

1314

15A

15B

15C

15D

15E

16A

16B

16C

CO

MM

EN

TS

1x

13

31

13

32

34

14

44

41

44

22

32

44

213

/8/1

982

07/0

7/20

07w

orks

sen

ior

tran

s-p

ort

office

r

11

11

44

14

44

41

34

24

44

33

22

33

33

313

/11/

1975

14/0

5/20

07w

orks

12

12

42

32

21

3x

34

x4

33

33

34

33

xx

403

/01/

1971

03/0

1/20

06ve

teri

nar

ym

edic

ine

assi

stan

tch

ief

typ

ist

21

11

23

22

12

32

xx

516

/5/1

974

01/0

6/20

00st

ud

ents

affai

rsch

ief

clea

ner

/mes

sen

-ge

r

41

33

34

14

41

21

23

34

42

22

22

24

22

725

/5/1

974

25/5

/200

6st

ud

ents

affai

rsch

ief

clea

ner

/mes

sen

-ge

r

12

13

34

34

44

42

24

34

43

43

22

23

23

815

/1/1

965

30/4

/199

9p

erso

nn

elh

igh

erex

ec-

uti

veoffi

cer

11

21

33

23

31

23

31

33

13

33

31

33

3

913

/12/

1975

18/9

/200

7m

ech

anic

alen

gin

eeri

ng

pro

fess

or1

11

22

22

33

32

42

34

22

11

13

33

1228

/12/

7330

/4/9

9S

tud

ent

Aff

airs

A.O

.1

21

44

44

44

42

34

34

42

33

43

13

44

Ret

ren

chm

ent

1310

/02/

1974

30/4

/99

Stu

den

tA

ffai

rsH

all

Su

-p

ervis

or1

11

13

41

44

14

41

41

44

43

34

34

43

4

1416

/12/

7430

/4/9

9M

edic

alC

en-

tre

Ch

ief

Ext.

Off

r.

11

23

41

44

41

23

42

44

23

33

42

33

4R

etre

nch

men

t

4121

/11/

1962

30/1

2/19

99ag

ricu

ltu

ral

exte

nsi

onch

ief

agri

cul-

tura

lte

chn

olo-

gist

21

11

4x

14

14

44

2

4304

/04/

1972

04/0

5/20

02W

orks

ser-

vic

esd

ept.

sen

ior

Dri

ver

22

22

24

11

43

42

22

14

43

33

12

21

4n

ewsc

hem

en

otte

sted

;ca

nn

otco

m-

par

e45

14/1

/197

330

/2/1

999

zool

ogy

12

33

11

14

12

13

41

23

31

32

11

146

07/0

1/19

7007

/01/

1989

Cat

erin

gC

hie

fC

ook

11

31

12

22

23

1

Sou

rce:

Fie

ldSurv

ey,

2008

62 of 108

Chapter 3

STUDY AREA/GENERAL INFORMATION

3.1 BACKGROUND OF THE AREA

The study area of this research work is the University of Nigeria, Nsukka.

The University has two campuses located at Nsukka (the main Campus) and

Enugu, both in Enugu state of Nigeria.

The main campus of the University is located on a valley on a plateau with

rolling hills around it at an average elevation of about 500 meters above sea

level in the town of Nsukka, which is about 80 kilometers North of Enugu.

The area is predominantly Savannah grassland with isolated stands of trees

and has a pleasant and healthy climate.

There are rainy and dry seasons from April to October and November to

March respectively every year. Relative humidity is about 70 % during the

rainy season and declines to 20 % during the dry season. The average annual

3.1. BACKGROUND OF THE AREA

temperature is about 24oC or 75oF. Two Hundred and sixty three hectares

of arable land are available for experimental agriculture. There is regular

transport between Nsukka and Enugu. Nsukka town is easily accessible from

all parts of Nigeria and has rapid urban development in recent time. It has

a large modern market with good facilities.

What later became the Enugu Campus of the University was the former

Nigerian College of Arts, Science and Technology, Enugu. It was incorporated

into the University in 1961.

Enugu is a modern city, accessible by air, rail and road. It is the admin-

istrative headquarters of Enugu State of Nigeria. The Faculties of Business

Administration, Environmental Studies, Law, Medicine and Health Sciences

are located at the Enugu Campus of the University.

A law to establish the University of Nigeria was passed by the then East-

ern Nigerian legislature in 1955. As an initial step toward the implementa-

tion of the commitment, the Eastern Nigeria Government invited both the

United States of America and the United Kingdom to send advisers to un-

dertake the planning of the physical and the academic programme of the

proposed University. Under the joint auspices of the University Council for

Higher Education Overseas and the International Co-operation Administra-

64 of 108

3.1. BACKGROUND OF THE AREA

tion (now the United States Agency for International Development, USAID),

Mr. J.W. Cook, Vice-Chancellor of the University of Exeter, Dr John A.

Hannah, President of Michigan State University and Dr Glen L. Taggart,

Dean of International Programme at the same University came to Nigeria in

1958.

On 30th November, 1958 the result of the survey, summarising extensive

investigations conducted by the team, was published in a White Paper by

the Eastern Nigeria Government. In April 1959, a Provisional Council was

appointed and vested with the financial and administrative powers necessary

to build the University. The University was formally opened on 7th Octo-

ber, 1960, while the Federation of Nigeria was celebrating the attainment of

her full sovereignty as an independent nation on 1st October of that year.

Her Royal Highness, Princess Alexandra of Kent, representing Her Majesty,

Queen Elizabeth II at the Nigerian independent celebrations, performed the

opening ceremonies and laid the foundation stone of the Universitys early

buildings. On 16th December, 1961, Dr Nnamdi Azikiwe, who was then

Governor General of the Federation of Nigeria and the chairman of the Pro-

visional Council, was installed the first Chancellor of the University. The

University conferred its first honorary degrees on the occasion. In December

65 of 108

3.2. ORGANIGRAM

of the same year, the University of Nigeria Law (1961) was passed. The Law

dissolved the Provisional Council and established a substantive Council.

The University therefore became the first autonomous and indigenous Uni-

versity in Nigeria, to award its own Degrees, Higher Degrees and Postgrad-

uate Diplomas. In the early, 1970s and 1980s respectively, the University

introduced Certificate Programme in Education and Sandwich Degree and

Diploma Programmes. The University was adversely affected by the Civil

War in 1967. The University recruits suitably qualified academic staff from

various parts of the World, although most of them are Nigerians.

3.2 Organigram

The organigram of the University of Nigeria is shown in figure 3.1.

As provided by the University Law, the Chief Executive Officer of the

University of Nigeria is the Vice-Chancellor. He is assisted in his day-to-day

functions by three Deputy Vice-Chancellors as well as a number of other func-

tionaries. These include the Registrar, Bursar, University Librarian, Chief

Security Officer, among others. One of the Deputy Vice-Chancellors oversees

the affairs of the University at the Enugu Campus.

Each of the fourteen academic Faculties is headed by a Dean who reports66 of 108

3.2. ORGANIGRAM

Figure 3.1: Organigram of the University of Nigeria

67 of 108

3.2. ORGANIGRAM

Directly to the Vice-Chancellor or through his Deputies. However, the Fac-

ulties of Medicine, Health Sciences & Technology, and Dentistry, are grouped

together as the College of Medicine headed by a Provost. In this case, the

affected Deans are expected to report to the Vice-Chancellor through the

Provost.

There are a number of administrative units each headed by a Director who

is ranked as being at par with a Dean. Some of these include the Academic

Planning Unit, the Student Affairs Department, the Management Informa-

tion Systems (MIS) Unit, the Department of Medical Services, etc.

In addition, the University maintains a number of special centres for re-

search and/or training, each headed by a Director. Some of these include the

National Centre for Energy Research & Development, National Centre for

Equipment Maintenance & Development, Institute of Development Studies,

Institute of Education, etc.

Each faculty has a number of Departments, each under a Head of De-

partment. Some administrative units, institutes and Centres may also have

Departments. Every staff or student belongs to a specific Department at any

one time.

68 of 108

3.3. OCCUPATION

3.3 Occupation

Nsukka town is an area with a significant number of civil and public servants.

There are also petty traders and peasant farmers living in the surrounding

villages. The University is the major industry and economic base of the

town. The University workers consist of academic and non-academic staff.

The academic staff popularly known as lecturers are involved in the teaching

of undergraduate and graduate students; and they also engage in research

in their various fields of study. The non-academic staff include the senior

and junior administrative staff, as well as technical staff who are involved in

the day to day administration of the institution and technical work of the

University.

The University began its academic programme on 17th October 1960 with

an enrollment of 220 students and 13 members of the academic staff. The

opening convocation addresses were delivered by the chairman of the Provi-

sional Council, Dr Nnamdi Azikiwe, the first President of the Federation of

Nigeria, and by Dr John A. Hannah, President of Michigan State University,

U.S.A.

In keeping with the essential purposes of all great universities since the

69 of 108

3.3. OCCUPATION

beginning of mans great struggle towards universal human dignity, the basic

objectives of the University of Nigeria are to seek the truth, to teach the

truth and to preserve the truth.

Hence, the University motto is to Restore the Dignity of Man. Suffice it

to mention that since its inception, the University has grown in leaps and

bounds. The total enrolment of students by 1995/1996 academic session was

20,747 comprising of full time undergraduate, part-time undergraduate; reg-

ular and part time postgraduate students. The staff strength has also sky

rocketed significantly. The Academic staff strength has grown to 1213; senior

Administrative (910), senior technical (983), Senior secretarial (429) and ju-

nior staff (2703). As at December 2008, the University had 14 faculties with

88 Departments, two schools, 8 sub-Departments and 7 Institutes/Centers.

The University was taken over along with other Universities in the country

by the federal Military Government on 1st April, 1973. A third campus was

opened in October 1973 in Calabar, Cross River State. The Campus at

Calabar became a full fledged University of Calabar in October, 1977.

70 of 108

3.4. ECONOMIC PATTERN

3.4 ECONOMIC PATTERN

Apart from petty trading and farming at subsistence level there are also a

good number of cottage industries such as bakeries, wood work, poultry and

piggery farms around the University town of Nsukka. For many years, there

were very few banks operating in Nsukka. But within the past two years,

the town and even the University has had an influx of many new generation

banks such as the Intercontinental Bank, United Bank for Africa (UBA),

Guarantee Trust Bank (GTBank), Diamond Bank, First Bank Plc. The

latter had opened earlier than others under the Rural Banking Scheme.

The sudden adventure of the banking industry in the town and the Uni-

versity community has provided job opportunities and further enhanced the

economic life of the people and the University generally. Banking businesses

which were hitherto transacted at Enugu metropolis could now be transacted

at Nsukka with minimum stress, especially with the online banking system.

Nsukka has been known for growing its popular yellow pepper, economic

trees and processing of Palm fruits and to produce large quantities of palm

oil, good quality honey and o. gbo. no. which are exported outside the town to

other big cities in Nigeria. This has continued to sustain the economic life of

71 of 108

3.5. PAYMENT OF BENEFITS

the people of Nsukka.

3.5 PAYMENT OF RETIREMENT BENEFITS

The procedure of processing of retirement benefit to staff in the University

of Nigeria Nsukka is outlined below:

• A prospective retiree of the University would be given six months no-

tice of retirement from the services of the University by the University

Administration. However, the onus lies on the retiring staff to inform

the Administration of his/her retirement since the Administration is not

under any obligation if the notice of six months is not given to the staff.

• On acceptance of notice, the unit of the Personnel Department in charge

of staff establishment (Academic, Administrative and Technical and Ju-

nior Staff) issues a letter of acceptance, congratulating the retiring staff

and stating the percentage of gratuity and pensions on total emolument

to be paid. The salary is stopped at the expiration of six months notice.

• On serving of notice of retirement, a set of clearance forms are attached

to the notification letter with which the staff is cleared. The clearance

papers are taken to various units/departments in the University to verify

72 of 108


any indebtedness or otherwise.

• Thereafter, the retiree completes a set of pension forms to be issued him

or her at the Personnel Department and submits same to the Person-

nel for processing in respect of the retirees final entitlement from the

University.

• The computation of the final entitlements is done by the Pension Unit

in the Bursary Department based on percentage in proportion to the

service period. The maximum service period is 35 years for both teaching

and non-teaching staff, and this attracts 100%. Other conditions for

payment of final benefits e.g. for proffesorial positions are stipulated in

the miscellaneous Decree No 11 of 1993.

• There is also room for voluntary retirement by staff of either category for

whatever reason. Any staff desiring to leave the University voluntarily

will give three months notice to the Administration or pay three-month

salaries in lieu of notice (for senior staff). In the case of junior staff, such

voluntary retiree will give one-month notice or pay one month salary in

lieu of notice. Other conditions of clearance and processing of final

entitlements remain the same.

73 of 108


• The final entitlements are calculated and all indebtedness deducted be-

fore payment is made.

74 of 108

Chapter 4

DATA PRESENTATION/ANALYSIS

In this chapter, a summary of the field data is presented, and analysis is

performed for each of the subquestions.

4.1 Data Presentation

A total of 500 copies of the questionnaire were distributed to the respondents,

out of which about 120 were retrieved and used for data analysis. Table 2.2

shows the first page of the data entry sheet with each entry presented in order

of the code number assigned to the copy of questionnaire.

4.2. DATA ANALYSIS

4.2 Data Analysis

4.2.1 Distribution of Responses

The number of respondents for each question varied from a minimum of 83

(question 16B) to a maximum of 115 (questions 3 and 4). The differences

in the number of responses is essentially due to the nature of the questions.

Questions 3 and 4 were more general and applied to every category of retired

staff, while questions 16B would be of greater interest to academic staff who

retired at or near the terminal status of Professor.

4.2.2 Analysis of Responses

We shall now consider the responses to each question from all the participants,

and also draw useful lessons from them. Using the data of table 4.1 the

percentage of the participants who selected any of the response options in

table 2.1 was plotted on a bar chart as shown in figure 4.1. The percentage

response for each option in each question varied from zero (O) (for option 5

in questions 2 to 16B) to 67% (for option 3 in question 7A). From the figure,

very wide gaps in participant responses are noticeable for questions 1, 7A,

12, 13 and 15B, while the responses were more uniform among the options

76 of 108

4.2. DATA ANALYSIS

for questions 5, 11, 14 and 15C.

Table 4.1: Analysis of participant responses to each questionQuestion No Option 1 Option 2 Option 3 Option 4 Option 5 Total

No % No % No % No % No %1 62 57.94 32 29.91 6 5.61 6 5.61 1 0.93 1072 52 46.02 32 28.32 21 18.58 8 7.08 1133 54 46.96 22 19.13 28 24.35 11 9.57 1154 28 24.35 17 14.78 52 45.22 18 15.65 1155 27 24.77 35 32.11 25 22.94 22 20.18 1096 18 17.14 29 27.62 23 21.9 35 33.33 1057A 41 38.32 26 24.3 72 67.29 18 16.82 1077B 20 18.69 15 14.02 27 25.23 43 40.19 1077C 17 16.19 15 14.29 27 25.71 45 42.86 1057D 20 18.35 11 10.09 34 31.19 44 40.37 1097E 23 21.3 17 15.74 34 31.48 34 31.48 1088 27 25.96 36 34.62 23 22.12 18 17.31 1049 18 18.75 23 23.96 35 36.46 20 20.83 9610 9 8.57 14 13.33 33 31.43 49 46.67 10511 21 22.34 31 32.98 22 23.4 20 21.28 9412 4 3.64 1 0.91 34 30.91 71 64.55 11013 7 6.31 3 2.7 34 30.63 67 60.36 11114 16 14.81 26 24.07 34 31.48 32 29.63 10815A 9 9.68 19 20.43 44 47.31 21 22.58 9315B 7 7.14 14 14.29 55 56.12 22 22.45 9815C 20 20.41 30 30.61 29 29.59 19 19.39 9815D 22 23.66 19 20.43 32 34.41 20 21.51 9315E 27 29.03 20 21.51 44 47.31 12 12.9 9316A 6 6.19 12 12.37 51 52.58 28 28.87 9716B 9 10.47 18 20.93 33 38.37 25 29.07 8616C 3 3.26 13 14.13 43 46.74 32 34.78 1 1.09 92

Source: Field Survey, 2008

All of these show that the participants are drawn from different back-

grounds and have different perceptions and experiences of pension adminis-

tration upon retirement.

1. Reason for Retirement

The purpose of this question is to determine the actual reason for retire-77 of 108

4.2. DATA ANALYSIS

Fig

ure

4.1:

Per

centa

gedis

trib

uti

onof

par

tici

pan

tsfo

rea

chre

spon

se-o

pti

onSou

rce:

Fie

ldSurv

ey,

2008

78 of 108

4.2. DATA ANALYSIS

ment of each of the respondents. From column 2 of table Ref (tab:response-

data), we notice that about 58% of the respondents retired by reason

of age, the next 30% retired on ground of length of service, while about

5.6% each retired on grounds of health or personal volition. A small per-

centage of workers were retrenched on two occasions in the University in

1984 and 1989 respectively. When such workers were retrenched, it was

a very mournful scenario for all those affected. Some of those retrenched

died out of hopelessness while others took the challenge and started a

new economic life and are better off with their families today.

This implies that all things being equal, most workers in the University

of Nigeria preferred to spend all of their active working life as University

staff and only retire upon attainment of retirement age. Among other

things, this could be due to the absence of positive inducements for staff

to take early retirement. Alternatively, it could be that the benefits

received during the period of active working career in the University

was perceived to be much better than that obtained during retirement.

Further investigations would be required to completely address this issue.

2. Your pension has been regular since retirement

79 of 108

4.2. DATA ANALYSIS

This question was designed to determine how the retired workers per-

ceive the regularity of payment of their pension after retirement, from fig-

ure Ref (fig:respondent-distribution), it is seen that the majority (46%)

feel very strongly that their pension has not been regular, while only

about 7% feel that it has been regular. Further informal interactions

with retired staff confirm that the pensions were not paid regularly.

According to some information, the intervals between payments were

also not regular, ranging from one month to well over 6 months. The

exact pattern of payments was not investigated. According to some in-

formants, another dimension of the irregularity was the percentage of

actual pensions paid each time. This was said to vary greatly, from

100% of what is due to as low as 50%. The determinants of the value

of pension to be paid were also not investigated since it is beyond the

scope of the present study.

3. Your gratuity was paid within one year of your retirement

One hundred and fifteen (115) of the participants responded to this ques-

tion, which sought to determine whether their gratuity was paid within

one year of retirement. About 47% of the respondents opted for strongly

disagree, while 19.1% indicated disagree. The next 24.4% agreed, while80 of 108

4.2. DATA ANALYSIS

the remaining 9.6% strongly agreed. This implies that the majority of

the retired staff of the University did not receive their gratuity within

one year of retirement. The obvious implication is that if the staff has no

savings, investments or other sources of support for the period of wait-

ing, such a retired person would be thrown into much financial distress.

It was beyond the scope of the present study to determine the immediate

and remote causes of such delays, and hence possible solutions.

4. Payment of your pension commenced within one year of your

retirement

This question sought to determine whether the payment of pension com-

menced within one year of retirement, and this attracted 115 responses.

Of these, 45.2% and 15.7% respectively agreed or agreed strongly with

the proposition, while 24.4% and 14.8% respectively disagreed strongly

or just disagreed. It is interesting to note this finding, that waiting for

the payment of their gratuity, majority of the retired staff received some

instalments of their pensions with which they could meet immediate

needs.

5. The Board of Trustees of the University has been responsible

81 of 108

4.2. DATA ANALYSIS

for the delay in the administration of retirement benefits to

retirees

This question, which was designed to determine if the Universitys Board

of Trustees for pensions had been responsible for the delays in the pay-

ment of pension benefits, attracted 109 respondents. The distribution

of responses among the various options was close ranging from 32% for

disagree to 20.25 for strongly agree. Thus, there was no sharp distinc-

tion between the participants views regarding the various options. It

is most probable that the majority of respondents were not sure of the

exact causes of the delays.

6. The delay in the administration of retirement benefits is at-

tributed to the NICON Insurance Corporation.

This question sought to find out whether the NICON Insurance Corpo-

ration could be blamed as being responsible for the delays in pension

payments. A total of 105 respondents reacted to this question, with

about one third (33.3%) indicating strongly agree, while 21.9% chose

agree. Put together, it is clear that over half (55.2%) attributed the

delays to NICON insurance corporation. The reaction of NICON to this

view of the majority could not be ascertained within the time frame of82 of 108

4.2. DATA ANALYSIS

the study.

7. The major reasons for the delay in the administration of re-

tirement benefits are

This question was determined to find out the participant views as to the

cause of delays in the administration of pension benefits with respect to

five (5) major problems in Nigeria namely lack of funds, mismanagement

of funds, corruption, poor statistical record or data, and inefficiency of

workers. A combination of the responses (disagree strongly + disagree

and agree + agree strongly) is shown in table 4.2. From the table, it

is clear that the majority of the retired staff are of the opinion that

lack of funds in the country is not the major cause of the delays, but

rather its mismanagement, and other corrupt practices, coupled with

poor statistical records and worker inefficiency.

Table 4.2: Participant views on the reasons for delay in administration of retirement benefits

ReasonNo ofrespon-dents

Disagreetotal (%)

AgreeTotal(%)

Lack of funds 107 62.6 37.4

Mismanagement of funds 107 32.7 67.3

Corruption 105 30.5 69.5

Poor statistical record 109 28.4 71.6

Inefficiency of workers 108 337.0 63.0Source: Field Survey, 2008

83 of 108

4.2. DATA ANALYSIS

8. Pension regulations and laws are strictly adhered to in the ad-

ministration of pensions and gratuity in University of Nigeria,

Nsukka.

This question attracted 104 respondents, with the majority of 60.5%

holding the view that the appropriate pension regulations and laws are

not strictly adhered to in the administration of pensions and gratuity.

9. The contributory pension scheme will bring better dividends

to retirees in the University of Nigeria, Nsukka.

For this question, there were majority (57.2%) agreeing that the new

contributory pension scheme would produce better results. Some of the

respondents observed, however, that the new scheme has not been tested

sufficiently to merit a proper assessment.

10. The former pension scheme brought a lot of hardship and suf-

ferings to the retirees in the university

This question presents a somewhat overall assessment of the impact of

the non-contributory pension scheme on the hardship level of retired

staff. The overwhelming view of 78.1% of the 105 respondents is that

the operation of the scheme brought a lot of hardship and suffering on

84 of 108

4.2. DATA ANALYSIS

the retired staff.

11. The new Pension Scheme does not have any good prospects for

the retirees of University of Nigeria, Nsukka

Like question number 9, this question focuses on the new contributory

pension scheme and seeks to know if the retired workers perceive it as

holding good prospects. The number of responses received was 94, with

the distribution between the different options not being sharp.

12. Many retirees in the University of Nigeria have lost their lives

in the course of waiting to receive their retirement benefits

This question attracted 110 responses, with the majority (95.4%) agree-

ing that many retirees have actually died while waiting to receive their

retirement benefits. This is a very sad commentary on the history of

pension administration in the University of Nigeria.

13. Many retirees have suffered a lot of frustrations and humilia-

tions in the course of processing their papers for retirement

This question relates to another sad experience of many retired staff.

Of the 111 respondents to this question, 91% agreed that many retirees

suffered a lot of frustrations and humiliation in the course of processing

85 of 108

4.2. DATA ANALYSIS

their papers for retirement. Further investigations revealed that these

frustrations include

• Undue delays in processing of papers

• Lack of clear-cut deadlines

• Unfriendly attitude of pension office staff

14. The screening of retirees from time to time has solved the

problem of ghost retirees’ in UNN

Recently, screening of retirees was introduced by agencies of both the

Federal Government and the University. The question was designed to

ascertain whether this has eliminated the problem of ghost retirees in

the system. Of the 108 respondents to this question, some 61% agreed

that it reduced the problem of ghost retirerees.

15. The major benefits that the contributory pension scheme will

bring to new retirees are

Like questions 9 and 11, this question relates to the new contributory

pension scheme and seeks to determine the views of the respondents

about the possible benefits of the new scheme in the five key areas are

shown in table 4.3. About 69.9% of the respondents agreed that the

86 of 108

4.2. DATA ANALYSIS

new scheme would ensure prompt payment of retirement benefits, while

78.6% agreed that it would improve compulsory savings.

Table 4.3: Respondent views on the major ben-

efits of the new contributory pension scheme

Benefit

No of

respon-

dents

Disagree

total (%)

Agree

Total

(%)

Prompt payment of retirement

benefits

93 30.1 69.9

Compulsory savings 98 21.4 78.6

Boost in the economy 98 51.0 49.0

Huge investments out lay 93 54.0 46.0

Job opportunities 93 60.5 39.5


16. The major flaws of the contributory pension scheme are

This last question again is directed at the new contributory pension

scheme. The views of the respondents were sought on the three issues

listed in table 4.4.

87 of 108

4.2. DATA ANALYSIS

Table 4.4: Respondent views on the major flaws

of the new contributory pension scheme

Issue

No of

respon-

dents

Disagree

total (%)

Agree

Total

(%)

The benefit is not defined unlike

the previous schemes

97 18.5 81.5

No provision for the highest cadre

in the University (professors) as

against the old scheme in which

they retire with 100% of their ter-

minal salary

86 31.4 68.6

There is no provision for gratuity

except for the lump sum which is

at the discretion of PFAS

92 17.4 81.3


From this table, most of the respondents agree that the benefits in the

new (contributory) pension scheme are not well defined as in the pre-88 of 108

4.2. DATA ANALYSIS

vious schemes. This could also mean that the benefits are not yet well

understood since its application is still new. The participants are also

concerned that the new scheme makes no special provision for professors

(who are the highest cadre of academic staff), nor for a clearly under-

stood gratuity.

89 of 108

Chapter 5

SUMMARY, CONCLUSIONS,

RECOMMENDATIONS

5.1 Summary

In this project, the problem of pension administration in Nigeria has been

considered from the perspective of the University of Nigeria, Nsukka. The

study involved an extensive review of available literature drawn from var-

ious sources, such as textbooks, published papers, newspaper articles and

documents available online from the Internet. In addition, oral interviews

involving representatives of the major stakeholders were conducted using

both structured and unstructured questionnaire. The structured question-

naire employed a five-point Linkert scale. The respondents included pension

administrators, pensioners and other knowledgeable persons. The data ob-

5.2. CONCLUSIONS

tained from the interviews were analysed using simple statistical procedures

incorporated in a computer spreadsheet software. This yielded condensed

data that are presented as tables or simple bar charts.

A brief discussion of the key points evident in the results is presented. In

addition, recommendations to guide future actions by the major stakeholders

are articulated and presented.

5.2 Conclusions

The problem of pension payment and its administration is not just a national

issue but a global phenomenon. Many nations of the world in Europe, Amer-

ica and other developed and developing nations have been faced with the

problem of managing their retired workers as well as payment of their enti-

tlements as they disengage from work. For many developed nations and many

multinational corporations, the problem of payment of retirement benefits to

their retired workers is not a herculian task since many decades ago, they

adopted the contributory Pension Scheme which applies to workers in both

the private or public service. The problem is more pronounced in developing

nations like Nigeria where the government had to bear the brunt of payments

of retirement benefit without any contribution made by the worker.91 of 108

5.3. RECOMMENDATIONS

In such nations, the governments were able to do it during periods of

economic boom and when retirees were fewer in Nigeria. It became an uphill

task when the number of retirees began to increase astronomically, and was

compounded by global economic recessions. Nigeria is one of the nations

that its retired workers had to face a lot of problems due to the fact that the

government could no longer manage and administer effectively the retirement

benefits of workers who were untimely retired, as the case of Nigerian army,

retrenched due to downsizing and closure of some government institutions

and departments or even normal disengagement from service.

Although the new pension scheme has not been tested and proven, it is

hoped that it would greatly reduce the problems of pension administration

which has existed in the past. A well organized pension scheme that will

ensure prompt payment of retirees and pensioners is highly desirable and

this must be rigorously pursued by government.

5.3 Recommendations

• Lump sum payment of gratuity as contained in the Pension Act of 1990

should be retained for immediate enjoyment of newly retired employee

for his rehabilitation;92 of 108

5.3. RECOMMENDATIONS

• The rate of the contributory pension into retirement savings account

(RSA) be put at 5% and 10% for employees and employers respectively;

• Pensioners should not be restricted by age in order to enjoy their pen-

sion benefits in their RSA since it is now a contributory scheme, or

where a slight qualified condition is deserved, then employees retired

compulsorily should be allowed to start withdrawing their pension ben-

efits immediately after such retirement;

• The retirement provision of 35 years of service or 60 years of age which

ever comes first (as contained in the Pension Act 1990) should be re-

tained to guarantee job security in the Public Service;

• The military, the police and other security agencies in the country should

be placed on the same contributory rate under section 9 of the Act.

• The Act should be extended to cover the state Public Service since

pension matter is contained in the exclusive legislative list in the 1999

constitution;

• There should be equitable representation of all stakeholders in the Na-

tional Pension Commission (NPC) to ensure confidence and probity.

93 of 108

BIBLIOGRAPHY

Adedapo, Johnson (undated) The Pension reform Act and its Implica-

tions, Pastines Consult Limited, Abuja

AGULANNA, E.C. and AGULANNA, G. G. (2003: 96 – 97) Management

of Retirement and Ageing ; Joe Mankpa Publishers Owerri, Nigeria

Ahmad, M. K. (2007) Outlook of the Nigerian Pension Sector Director

General, National Pension Commission (PENCOM), Abuja – Nigeria

Bailey, S. K. (1968) Objectives of the theory of public Administration. In:

J. C. Charlesworth (ed) Theory and Practice of Public Administration,

Monograph 8, American Academy of Political and Social Science.

Bob Ojujoh, (2005) : The Pension Reform Act 2004: The need for Amend-

ment. The Vanguard Newspapers, January 2, 2005

Encyclopaedia Americana Vol. 13 Pp. 186

94

BIBLIOGRAPHY

Ezeani, E O (2005) Fundamentals of Public Administration. SNAAP Press

Ltd, Enugu, Nigeria

Fayol, Henry (1949) General and Industrial Management as quoted in

Ezeani E. O. (2005)

Federal Republic of Nigeria, (1999) . Constitution of the Federal Re-

public of Nigeria. Federal Government Press, Abuja

GSRL (undated) Contributory Pension Scheme in Nigeria. Global Strate-

gic Research Outcome Ltd, Abuja, Nigeria

GSRL (undated) Frequently asked questions and their answers on the con-

tributory pension scheme in Nigeria. Global Strategic Research Out-

come Ltd (GSRL), Abuja, Nigeria

Johnson, I. E. (1992: 98 – 102) : Public Sector Accounting and Finan-

cial Control by Financial Training, Nigeria

Koontz H., Oonnell C. and H. Weihrich (1983) Management, London:

McGraw-Hill International Book Company

Legal Brief Africa (2005) : Pension Scheme Transitional Guidelines, Le-

gal Brief Africa Sun, 30 January, 2005, Issue No. 115

95 of 108

BIBLIOGRAPHY

Louis Iba (2006) New Pension Act is a Revolution to Pension Administra-

tion, Daily Sun Newspaper Monday, October 30, 2006

McGregor D. (1966) Leadership and Motivation, Cambridge: MIT Press

National Pension Commission, (2006) Highlights of the Contributory Pen-

sion Scheme in Nigeria, National Pension Commission, Abuja

Nigeria Labour Congress (NLC), Tunde Union Congress (TUC) , and

Congress of Free Trade unions (CFTU) (2004): Text of A Press

Conference on the New Pension Act, 2004 published in The Sun Pub-

lishing LTD. July 2004

Nwizu G. (1999) Eminent Administrative Thinkers from taylor to Present

Day, Enugu: John Jacobs Classic Publishers Ltd.

Obasi, N. I. (1999) Research Methology in Political Science Academic Pub-

lishing Company, Enugu, Nigeria

Obikeze, O. S. and Obi E. A. (2004: 61-64) Public Administration in

Nigeria: A Developmental Approach. Book Point LTD, Onitsha, Nigeria

Ojugoh, Bob (2005) The Pension Reform Act 2004: The need for Amend-

met Vanguard, January 2, 2005

96 of 108

BIBLIOGRAPHY

Olu, Okotoni and Aderonke Akeredolu (2005) Management of Pension

Scheme in the Public Sector in Nigeria, AJPAM Vol XVI, No. 2

Oyerinde, R. L. (undated) Adequate Funding of Pension and Understand-

ing of Acturial Valuation and Investments of Pension Schemes and Re-

ports. Assets and Insurance Section, Bursary Department, University of

Jos.

Ozor, E. (1999: 140-151) “Impediments to Processing Retirement Bene-

fits in Local Government Service in Nigeria” International Journal of

Studies in the Humanities (IJOSH) Vols. 1 and 2 No. 2

Federal Republic of Nigeria (2004) PENSION Reform Act 2004. Fed-

eral Government Press, Abuja

University of Nigeria, Nsukka (2004) . Letter dated July 9, 2004 by

First Trustees to Personnel Department, University of Nigeria, Nsukka

World Book Encyclopaedia (2004) Vol. 15, pp 272–273. World Book

Inc: A Scott Fetzer Company, Chicago

97 of 108

List of Tables

2.1 Linkert coding formular utilised . . . . . . . . . . . . . . . . . 61

2.2 A typical page of the data entry sheet . . . . . . . . . . . . . . 62

4.1 Analysis of participant responses to each question . . . . . . . 77

4.2 Participant views on the reasons for delay in administration of

retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . 83

4.3 Respondent views on the major benefits of the new contribu-

tory pension scheme . . . . . . . . . . . . . . . . . . . . . . . 87

4.4 Respondent views on the major flaws of the new contributory

pension scheme . . . . . . . . . . . . . . . . . . . . . . . . . . 88

98

List of Figures

2.1 Schematic representation of the conceptual framework . . . . . 54

3.1 Organigram of the University of Nigeria . . . . . . . . . . . . 67

4.1 Percentage distribution of participants for each response-option 78

99

Appendix A

Questionnaire

.


DEPARTMENT OF PUBLIC ADMINISTRATION AND

LOCAL GOVERNMENT

QUESTIONNAIRE FOR RETIREES OF THE UNIVERSITY

This questionnaire is part of an M.Sc Research Thesis in the above De-

partment. Please, be assured that every information supplied will be treated

with utmost confidence. It is precisely for academic purposes.

PERSONAL DATA

Date of 1st Appointment100

Date of Retirement

Department at Retirement

Status on Retirement

IN THE FOLLOWING QUESTIONS, PLEASE UNDERLINE

OR MARK ANY ONE OF THE OPTIONS (i), (ii), (iii), (iv) or

(v) THAT BEST SUITS YOUR OPINION OR EXPERIENCE

1. Reason for Retirement:

(i) AGE (ii) LENGTH OF SERVICE (iii) HEALTH (iv)

VOLUNTARY RETIREMENT (v) Others (specify)

2. Your pension has been regular since retirement (i) Strongly Disagree

(ii) Disagree ( iii) Agree (iv) Strongly Agree (v) Others

(specify)

3. Your gratuity was paid within one year of your retirement (i) Strongly

Disagree (ii) Disagree ( iii) Agree (iv) Strongly Agree (v)

Others (specify)101 of 108

4. Payment of your pension commenced within one year of your retirement

(i) Strongly Disagree (ii) Disagree ( iii) Agree (iv) Strongly

Agree (v) Others (specify)

5. The Board of Trustees of the University has been responsible for the

delay in the administration of retirement benefits to retirees (i) Strongly

Disagree (ii) Disagree ( iii) Agree (iv) Strongly Agree (v)

Others (specify)

6. The delay in the administration of retirement benefits is attributed to the

NICON Insurance Cooperation. (i) Strongly Disagree (ii) Disagree

( iii) Agree (iv) Strongly Agree (v) Others (specify)

7. The major reasons for the delay in the administration of retirement

benefits are:

(a) Lack of funds (i) Strongly Disagree (ii) Disagree ( iii) Agree

(iv) Strongly Agree (v) Others (specify)

(b) Mismanagement of funds (i) Strongly Disagree (ii) Disagree


(c) Corruption (i) Strongly Disagree (ii) Disagree ( iii) Agree

(iv) Strongly Agree (v) Others (specify)102 of 108

(d) Poor statistical record or data (i) Strongly Disagree (ii) Dis-

agree ( iii) Agree (iv) Strongly Agree (v) Others (spec-

ify)

(e) Inefficiency of workers in the pension’s office of the University (i)

Strongly Disagree (ii) Disagree ( iii) Agree (iv) Strongly


8. Pension regulations and laws are strictly adhered to in the administra-

tion of pensions and gratuity in University of Nigeria, Nsukka. (i)

Strongly Disagree (ii) Disagree ( iii) Agree (iv) Strongly


9. The contributory pension scheme will bring better dividends to retirees

in the University of Nigeria, Nsukka. (i) Strongly Disagree (ii)

Disagree ( iii) Agree (iv) Strongly Agree (v) Others (specify)

10. The former pension scheme brought a lot of hardship and sufferings to

the retirees in the university. (i) Strongly Disagree (ii) Disagree


11. The new Pension Scheme does not have any of good prospects for the

retirees of University of Nigeria, Nsukka. (i) Strongly Disagree (ii)103 of 108

Disagree ( iii) Agree (iv) Strongly Agree (v) Others (specify)

12. Many retirees in the University of Nigeria have lost their lives in the

course of waiting to receive their retirement benefits. (i) Strongly Dis-

agree (ii) Disagree ( iii) Agree (iv) Strongly Agree (v)

Others (specify)

13. Many retirees have suffered a lot of frustrations and humiliations in the

course of processing their papers for retirement. (i) Strongly Disagree

(ii) Disagree ( iii) Agree (iv) Strongly Agree (v) Others

(specify)

14. The screening of retirees from time to time has solved the problem of

ghost retirees’ in UNN. (i) Strongly Disagree (ii) Disagree ( iii)

Agree (iv) Strongly Agree (v) Others (specify)

15. The major benefits that the contributory pension scheme will bring to

new retirees are:

(a) Prompt payment of retirement benefits (i) Strongly Disagree (ii)

Disagree ( iii) Agree (iv) Strongly Agree (v) Others

(specify)

104 of 108

(b) Compulsory savings for retirees (i) Strongly Disagree (ii) Dis-


ify)

(c) Boost in the economy of Nigeria (i) Strongly Disagree (ii) Dis-


ify)

(d) Huge investments outlay for the nation (i) Strongly Disagree (ii)


(specify)

(e) Job opportunities for the unemployed (i) Strongly Disagree (ii)


(specify)

16. The major flaws of the contributory pension scheme are:

(a) The benefit is not defined unlike the previous schemes (i) Strongly

Disagree (ii) Disagree ( iii) Agree (iv) Strongly Agree

(v) Others (specify)

(b) No provision for the highest cadre of academic staff in the University

(Professors) as against the old scheme in which they retire with 100%

105 of 108

of their terminal salary. (i) Strongly Disagree (ii) Disagree


(c) There is no provision for gratuity except for the lump sum which is at

the discretion of the PFA’s. (i) Strongly Disagree (ii) Disagree


106 of 108

Appendix B

INTERVIEW SCHEDULE

B.1 Unstructured (Oral) Interview

1. What is the concept of pension administration in Nigeria?

2. What are the causes of delay in the administration of pension and gra-

tuity in Nigeria?

3. Are there regulations guiding the administration of pension and gratuity

in Nigeria?

4. What are the impacts of the delay on the retired workers, especially in

the University of Nigeria?

5. What remedy has the new pension scheme provided to the identified

problems of pension administration in Nigeria?

107

B.2. INTERVIEW WITH PENSION MANAGER

B.2 Interview with Pension Manager

An interview with the Pension Manager of the University of Nigeria, Mr. K.

T. Ihebom was held at the Nsukka Campus of the University in May 2007.

The interactive session centred around the following key questions:

1. When did the University of Nigeria commence the Pension Scheme?

2. How many pensioners have been registered in the University of Nigeria

Pension Scheme since its inception?

3. What is the total amount so far spent on pensioners since inception?

4. As the Pension Manager, what are some of the problems encountered

with the administration of pensions in the University of Nigeria?

5. Outline some of the major causes of delay in the payment of retirement

benefits to retirees of the University of Nigeria?

6. What are the major flaws in the Contributary Pension Scheme defined

in the 2004 Pension Reform Act?

7. In your opinion, are there benefits that the new Pension Scheme will

provide to the retirees of the University and the entire Nigerian economy?

108 of 108

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