THE IMPACT OF CONTRIBUTORY PENSION SCHEME ON THE NIGERIAN ECONOMY
ABSTRACT
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.
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