The problems associated with the 1979 Pension Act necessitated its abolishment and on 25th June 2004 and a new pension reform Act was enacted. The unique feature of this new Act is that it provides for contribution for the employees and the employers, each making 7.5% contribution to the scheme, except for the military.
Voluntary saving was also introduced where self employed workers can make their contribution. A commission was set to register pension administrators and fund custodians and to ensure their supervision. The purpose of this research is to evaluate the effects of the reform Act on the public. In this evaluation, the researcher uses both primary and secondary data for purposes of collecting data.
The finding of the research revealed that most of the employees have little or no knowledge of the provision of the Act. Voluntary saving that will help many Nigerians are not made or encouraged. However, most employees that are into the scheme believed that they are satisfied with the operation of the pension administrators thus, the researcher recommended that government should increase its contribution to its employees. It is also recommended that copies of the Act should be made available to the public and employees to ensure that workers have good knowledge of the Act.
TABLE OF CONTENTS
CHAPTER ONE
1.1 Background of the study - - - - - 1
1.2 Statement of problems - - - - - - 3
1.3 Objectives of the study - - - - - 6
1.4 Research Hypothesis - - - - - - 7
1.5 Statement of hypotheses - - - - - 8
1.6 Significance of the Study - - - - - 8
1.7 Scope of the study - - - - - - 9
1.8 Limitation of the study - - - - - 9
1.9 Definition of Terms - - - - - 9
1.10 Plan of the study - - - - - - - 11
CHAPTER TWO
Literature Review
2.1 Introduction - - - - - - - 12
2.2 Problems associated with the payment of Pension
(Retirement benefit) - - - - - - 16
2.3 Pension Reform Act 2004 - - - - - 16
2.4 Contribution as Tax deductible Expenses - - 18
2.5 Investment of Pension Funds - - - - 19
2.6 Retirement savings account and remittance - - 22
2.7 Minimum Pension Guarantee - - - - 23
2.8 Transfer of entitlement from defined benefit scheme 24
2.9 Offences, penalty and enforcement power - - 26
2.10 National Pension Commission - - - - 28
2.11 Composition of the commission - - - - 29
2.12 Functions of the commission - - - - 30
2.13 Power of the commission - - - - - 32
2.14 Books of account - - - - - - 33
2.15 Pension Fund Administrators - - - - 34
2.16 Pension Cause custodian - - - - - 35
2.17 Functions of Pension Funds Custodians - - 35
2.18 General Obligations of Pension fund Administrator - 36
2.19 Chilean Pension System - - - - - 37
Research Methodology
3.1 Introduction - - - - - - - 42
3.2 Research Design - - - - - - - 42
3.3 Population of the study and Sample Size - - 43
3.6 Method of Data Collection - - - - - 44
4.2 Data Presentation and analysis- - - - - 45
4.3 Testing Hypothesis - - - - - - 55
4.5 Research findings - - - - - - 59
Summary, Conclusion and Recommendations
5.1 Summary - - - - - - - - 62
5.2 Conclusion - - - - - - - - 64
5.3 Recommendations - - - - - - 64
Bibliography - - - - - - - 66
Appendices - - - - - - - 70
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Prior to the enactment of the Pension Reform Act (2004), Pension Schemes in Nigeria had been bedeviled by many problems. The public service operated and unfounded defined benefits scheme and the payment of retirement benefits were budgeted annually. The annual budgetary allocation for pensions was often one of the most vulnerable items in budget implementation in the light of resources constraints. In many cases, even where budgetary provisions were made, inadequate and untimely release of founds resulted in delays and accumulation of arrears of payment of pension right. It was obvious therefore that the defined benefits scheme could not be sustained (Pension, 2007).
In the private sector on the other hand, many employees were not covered by the pension schemes put in place by their employers and many of these schemes were not founded. Besides, where the schemes were funded, the management of the pension funds were full of malpractices between the fund managers and the trustees of the pension funds (Pencom, 2007).
This scenario necessitated a re-think of pension administration in Nigeria. Accordingly, the pension was initiated in order to address and eliminate the problems associated with pension schemes in the country. The out come of the reform was the enactment into law of the Pension Reform Act. 2004. (Pen com, 2007).
The pension reform programme is governed by the key principles of sustainability, safety and security of benefits, transparency, accountability, equality, flexibility, inclusively, uniformity and
practicability (Pencom, 2007).
The pension Reform Act 2004, established the National Pension Commission (Pencom). As the body to regulate, supervise and ensure the effective administration of pension matters in Nigeria. It licenses, regulates and supervises pension operation of Ppension Fund Administrators (PF A), Pension Fund Custodians (PFCs), Closed Ppension Fund Administrators (CPFAs), existing schemes that are approved to
continue by the commission and any other pension related institutions (Economic Confidential, Dec., 2007)..
This study will give an insight to the new Pension Reform Act 2004, evaluate the effect of the contributory Pension Scheme on the Nigerian Public. The study will also look at the roles of key players in the new pension reform and assesses their contribution towards the development to the pension industry. Lastly, the study will provide an alternative approach to the new pension system in Nigeria.
1.2 STATEMENT OF THE PROBLEM
In line with the same policies adopted every where, the Nigerian government has introduced a new pension scheme, which amounts to privatization of pensions. Workers will no longer pay into a State. Pension Fund. Now they will depend on private funds that supposedly will make the money grow by investing it in stocks, shares and other speculative activities. What is worse is that if any of these funds collapse, the government provides no guarantee.
The new pension reform seems to be another anti-worker policy of the government, where the future of the workers is now openly tied to the whims and caprices of a series of emergency investors. These so - called Pension Fund Administrators and custodians
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