IMPACT OF RETIREMENT BENEFITS ON
THE LIVING CONDITION OF RETIREES IN ALAGBOOLE AREA OF OGUN STATE NIGERIA.
ABSTRACT
The
research focuses on the appraisal of the impact of retirement benefits on the living
condition of retirees in Alagboole Area Of Ogun State, Nigeria. It provides an
assessment of retirement benefits in Nigeria, the reality of living condition
of retirees as well as determine the impact of retirement benefit on the living
condition of retirees.
INTRODUCTION
Retirement benefits aid the retirees to sustain themselves when
they are out of job or too old to do any other thing. This accounts for the
importance government everywhere attaches to retirement benefits; at least to
cater for the welfare of their retirees, who had spent the productive part of their
life working for the growth and development of the country.
One of the retirement benefits well
known the world over is pension. It is the amount paid by government or company
to an employee after working for some specific period of time, considered too
old or ill to work or have reached the statutory age of retirement (Adam,
2005).
As a scheme, Pension is the periodic
payment granted to an employee for services rendered, based on contractual
legal enforceable agreement, paid by an employer at the agree time of termination
of appointment (Iwu, 2007).
Pension in Nigeria could be traced to
the 1951 Pension Ordinance which was the first legislative Act, this was
followed by the establishment of the National Provident Fund (NPF) in 1961 to cater
for pension issues in the private sector (Ayegba et al, 2013).
In
1979, the Pension Act No. 102 and Armed Forces Pension Act No. 103 were
instituted.
Subsequently in 1987, the police and
government agencies pension scheme was established under Pension Act No. 75 of
1987 (Ahmad, 2006). Similarly, in 1987, the local government staff pension
board was established to take care of pension matters among local government employees.
The shortcomings of the previous scheme heralded the National Social Insurance Trust
Fund (NSITF) in 1993 to address pension and retirement issues in the private
sector (Ayegba et al, 2013).
The
defined pension scheme was characterized by series of problems ranging from
lack of fund to the presence of ineligible pensioners on the pension payroll.
To address these problems, the
Federal government in 2004 introduced
the contributory pension scheme (Umar et al 2012).
As
a result of the obvious lapses in the Pension Act of 2004, the National
Assembly in 2014 amended the Act. This was signed into law in July, 2014 by
President Jonathan as Pension Act,
2014.
Despite
the visible efforts by the government to caterfor the welfare of these
retirees, most of them still find it difficult to receive their pension at the
end of every month; and this has left the retirees to leave a life of misery
and penury.
The
new pension scheme introduced in 2004 was received with accolades and cheers
especially from would-be-retirees and pensioners who hitherto saw the old
scheme as ineffective occasioned by weak administration and corruption, as well
as unreliable records keeping (Ohai et al, 2013). Shortly after coming on
board, many Nigerians became uncomfortable with the activities of the Pension
Fund Administrators and Pension Fund Custodians.
Significantly however, many pensioners
and would-be-retirees are not well informed about the operations of the new
pension scheme. This low level of awareness has triggered off anxiety and uncertainty
about their retirement years (Omoni, 2013). Furthermore, the National Pension Commission
(PENCOM), saddled with the responsibility of regulating the activities of the Pension
Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) lacks the
regulatory capacity to check the excesses of the PFAs and PFCs. As Herskovit
(2007) observed that with the level of corruption in the country, it is
doubtful that one regulatory body like PENCOM could check fraud by PFAs and
PFCs.
More
importantly, pensioners across the country still witness irregularities and
nonpayment of their pension as and when due. Review of Public
Administration and Management Vol. 3, No. 6, December 2014 182
CHAPTER 1
1.1 BACKGROUND OF THE
STUDY
One of the reasons why the old pension
scheme was jettisoned was because of lack of fund and late payment of
pensioners’ benefits. These and other palpable reasons pauperized and reduced Review of Public
Administration and Management Vol. 3, No. 6, December 2014 188 the retirees to live in misery to the extent that some
people referred to them as “dead woods”.
However,
the introduction of the new pension scheme rekindled their hopes and the hopes
of would-be-retirees. Significantly, the turn of events in recent days as
regards late payment or non-payment of pension is beginning to dampen the hopes
of these people the disparity between the old pension and the new pension.
According
to them those in the old pension received about 80 percent of their money while
those in the new pension received less than 30 percent (FRCN, News, 2015). More
importantly, the Pension Reform Act of 2004, section 4c stipulates
that:“Retirees will have not less than 50% of their last pay as monthly pension
as at the date of retirement”.
Unfortunately,
none of the retirees enjoyed this amount since the inception of the Act till
date Kajusola, 2015).
Furthermore,
the old pension scheme was characterized with late payment, and the new scheme
was meant to ensure that retirees received their pension as at when due.
However,
most retirees do not get their entitlements as at when due. Some are owed for
up to 10 months due to some administrative bottle necks either from the Pension
Commission or the Pension Fund Administrators. Derowoju, (2012) noted however
that many retirees’ benefits are delayed because some of them do not inform
their Pension Fund Managers before retirement; this results to late clearance
from the employers and incomplete documentation with the PFAs.
Other
factors for the delay of payment include; failure to notify. Again, the
investment of Retirees’ contributions take some time to produce returns and
this often causes some delays in paying the pensioners their benefits. As
Adedeji (2013) observed that returns can be inversely correlated so when one is
up the other is down, some assets are long term in nature and may take time to
generate returns, thus the delay in these returns, delay the payment of pension
to retirees.
Furthermore,
the contributory pension scheme is still haunted by the old fears of traced and
corruption that encumbered the old national pension fund. Already there are
complications in the form of sharp practices among the staff of some unnamed
PFAs have manifested in the new pension scheme (Ohai et al, 2013); and these
complications have resulted in non-payment of some pensioners in the new scheme
their complete retirement package (Kajusola, 2015).
Review of Public Administration and Management Vol.
3, No. 6, December 2014
The
research intends to investigate the
impact of retirement benefit on the
living condition of retirees in Alagboole Area Of
Ogun State
1.2 STATEMENT OF THE PROBLEM
The
problem confronting this research is to investigate the impact of retirement
benefit on the living condition of retirees in Alagboole
Area Of Ogun State
.The re-occurring nature of policy changes on retirement benefit seems rather
difficult to understand and does not conform with current economic realities
facing retirees.
1.3 RESEARCH QUESTION
1
What is the nature of retirement benefit in Nigeria?
2
What is the impact of retirement benefit on the living
condition of retirees in Alagboole Area Of
Ogun State?
1.4 OBJECTIVE OF
THE RESEARCH
1
To appraise the nature of retirement benefit in Nigeria?
2
To determine the impact of retirement benefit on the living
condition of retirees in Alagboole Area Of
Ogun State?
1.5
SIGNIFICANCE OF THE STUDY
The
study shall analyze the nature and impact of retirement benefit on current economic realities
facing retirees with a view to providing recommendations on retirement policy
formulation and implementation.
1.6
STATEMENT
OF HYPOTHESIS
1 H0 The
level of the living condition of retirees in Alagboole Area Of Ogun
State is low
H1 The level of the living condition of
retirees in Alagboole Area
Of Ogun State is high
2
H0 The
level of retirement benefit of retirees in Alagboole Area Of Ogun
State is low
H1 The
level of retirement benefit of retirees in Alagboole Area Of Ogun
State is high
3
H0 The
impact of retirement benefit on the living condition of retirees in Alagboole
Area Of Ogun State is low
H1 The impact of retirement benefit on the
living condition of retirees in Alagboole Area Of Ogun
State is high
1.7 SCOPE OF THE STUDY
The research is focused on appraising
the impact of retirement benefit on the living condition of retirees in Alagboole
Area Of Ogun State
1.1
DEFINITION
OF TERMS
PENSION
Pension
is the periodic payment granted to an employee for services rendered, based on contractual
legal enforceable agreement, paid by an employer at the agree time of termination
of appointment (Iwu, 2007)
RETIREMENT BENEFIT
Retirement
benefits aid the retirees to sustain
themselves when they are out of job or too old to do any other thing. This
accounts for the importance government everywhere attaches to retirement
benefits; at least to cater for the welfare of their retirees, who had spent
the productive part of their life working for the growth and development of the
country.
One of the retirement benefits well
known the world over is pension. It is the amount paid by government or company
to an employee after working for some specific period of time, considered too
old or ill to work or have reached the statutory age of retirement (Adam,
2005).
As
a scheme, Pension is the periodic payment granted to an employee for services
rendered, based on contractual legal enforceable agreement, paid by an employer
at the agree time of termination of appointment (Iwu, 2007).
.