A Study Of Impact And Implication Of Restructuring The Nigerian Pension Scheme(a Case Study Of Enugu State Pension Scheme)

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This research work titled “Impact and implication of restructuring the Nigerian pension scheme” with particular reference to Enugu state Pension Scheme. The researcher evaluated the role of Nigerian pension scheme in the development of Nigerian economy, examined the effects of the restructuring on the scheme, identified the problems associated with restructuring of Nigerian pension scheme and possible way out. Data for the study was sourced from two main sources which include Primary and Secondary sources of data Collection. Primary data: questionnaires and oral interviews were used to collect information from the respondents. Secondary data: journals, and other relevant materials relating to the area of my investigation will be review. Extensive literature review was carried out on the direct literature and indirect literature on books, journals and past works. The research instrument used in this study includes oral interview and questionnaire. The questionnaire is structural as to contain both close and open ended question. Simple tables and percentages were used in treatment of data. Based on the findings the researcher recommends that payment of the pension should b given to the Bishop  for them to administer so that the evil malpractice involved in the hand of government and society at large should be eliminated. Every company or department/establishment should maintain staff nominal roll of both junior and senior staff including seniority staff list.



Title page                                                                                 i

Approval/ Certification page                                                    ii

Dedication                                                                               iii

Acknowledgment                                                                     iv

Abstract                                                                                   v

Table of Contents                                                                     vi


1.0      Introduction

1.1      Background of the Study                                                 1

1.2      Statement of Problems                                                     7

1.3      Objective of the Study                                                     8

1.4      Hypotheses                                                                    9

1.5      Research Questions                                                         9

1.6      Significant of the Study                                                   11

1.7      Scope of the Study                                                           11

1.8      Limitation of the study                                                     12

1.9  Definition of Terms                                                           12           


Empirical review and theoretical review                                   14


3.1  Research design                                                                        29

3.2  Area of the study                                                               30

3.3  Population of the study                                                     30

3.4  Sampling Method                                                             31

3.5 Research Instrument                                                                 33

3.6  Validity and reliability of research instruments                        34

3.7 Sources of Data                                                                 34

3.8  Analytical Technique                                                                35


4.0      Presentation, Interpretation and analysis of data

4.1      Presentation and analysis of data                                    37

4.2      Test of Hypothesis                                                           47


5.0      Summary of Findings/Conclusion and RecommendationS.

5.1      Findings                                                                          55

5.2      Conclusion                                                                      58

5.3      Recommendations                                                           61

Bibliography or reference                                                66

Appendix i                                                                       69

      Appendix ii: Questionnaire                                                        70





A pension scheme is a planned program, which enable corporate organization to acquire and set aside fund to cater for the well being of their staff after retirement from active service.

According to pension reform Act of 2004 by the Obasenjo led administration (Aderinokun&Adoba, 2004, National Pension Commission, 2008).

The reform is contributory in nature with the intent ofensuring that every person who has worked in either thepublic or private sectors receives his or her retirementbenefit as in when due. The reform was to serve associal welfare scheme for the aged, by ensuring thatworkers save to cater for their livelihood during old age(National Pension Commission, 2005; Sule, 2009).The scheme enables pension to benefits to be paid to the beneficiaries. It could be paid to retired employee, a widow or a disabled person. There are legal and administrative procedures and processes made to facilitate the realization of this objective in both to public and private sectors of our economy. Pension benefits are given for meritorious services to the organization.

The scheme is classified into two parts:

(a) A non-funded plan where the fund is under the control of employer. This is where payment to retired employees are made directly from operations by the organization as they become due without accumulation of funds. This is obtainable in the public services system and

(b) Contributory plan – where the employees bears parts of the cost (i.e. employees pay some portion for example, 10% of their gross monthly income, while the employer pays 15% of the gross monthly income. Organizations specific in their pension plan, the number of years an employee has to service before he/she qualifies for pensions. In Nigeria, most organization currently allows a minimum of five and ten years for gratuity and pension respectively.

The organizations that run a pension fund scheme usually have a pension board, such as the local government staff pensionsboard. There is also the Nigeria Social Insurance Trust Fund (NSITF), which now replaces the former national provident fund. This caters mainly for the needs of the private sector. When establishment pension plans through “retirement plans”, that qualify under the international Revenue Code, approval would be sought from the Joint Tax Board, so that the deductions would be tax-free.

Those expected to run the contributory pension schemes are:

1.  Every worker who is employed by a company incorporated or deemed to be incorporated under the Company and Allied Matters Decree (CAMA) 1990.

2.  Every workers employed by a partnership irrespective of the number of workers employed is not less than five including owners.

The two types of pension scheme used in Nigeria are:

(a) The self-administered pension scheme, which is managed and administered by the trustee of the scheme. It is their responsibility to pay retirees their pension regularly and invest the balance surplus fund.

(b) The insured pension fund scheme is managed and administered by an underwriter on behalf of owners of the scheme i.e. the Board of Trustees.

The underwriters (actuaries) invest the contributory funds into some government bonds or gilt-edge securities, commercial stocks, and today, they are in real estate and transport services. They by this contribute to the economic development of the country; collect the principle contributions, while the fund continue to generate more money through multiplier concept.

Government scheme, which is a non-funded scheme, is the core public service plan. It is planned to totally dependent on funding from the treasury to the extent law permits this arrangement. It is charged to the consolidated expenditure. It will be worthy to note that pension is a liability alreadyincurred and as such, the fund to meet this obligation should be secured and made available always.

The objective of pension scheme is to ensure a health, stable, economic and social atmosphere that will promote harmony and given a sense of belonging to the retirees. This is achieved through:

-      Maintaining unbroken service, by retaining experienced staff, high rate of productivity and operational safety is achieved through good quality of labour force and efficiency.

-      Confidence in serving officers that their status would still be maintained even after their service, by providing them a regular periodic payment to prevent them from slipping into destitution.

-      To ensure loyalty and orderliness in the public trust would work conscientiously of the expected pension benefits.

-      The pension fund is also used to make investments-cost saving to generate more money and employment in the economy.

The history of pension in Nigeria was dated back to 1946 with the first pension legislation enacted in 1951, referred them to as pension law was primarily designed for the United Kingdom Officers who will move from post to post in vast British Empire.




As to whether this beautiful scheme is being implemented accordingly, there lies the problem. There has been public outcry on the maltreatment to our senior citizens, who as a result has been forced to resort to military to press for their rights. The widows’ children, next of kin or dependant relatives of deceased officers undergo series of financial destitution and distress, in order to reclaim their benefits. The statement of the problem are therefore identified as follows:

1.   Lack of knowledge on the part of operation on why the pension scheme was originated.

2.   Shortage of manpower.

3.   Increase in death rate.

4.   Lack of legislation to back the scheme and reviews.

5.   Delays in settlement of pension benefits.

6.   Delays in promotion leading to re-computations and denial of rights.


Problems of the scheme are inexhaustible. All the above constraint combined in the high mortality rate of our senior citizens and problems to their dependent relatives, who form an integral part of the society.



The objectives of the study are manifold. The researcher would like to mention the following:

1.   To examine the impact of restructuring on the development of Nigerian pension system.

2.   To examine the relationship between restructuring of Nigerian pension scheme and the development of Nigerian economy.

3.   To evaluate the extent at which the management of Nigerian pension scheme apply new technologies in their operation.

4.   To identify the problems of the scheme and their sources appropriately.



In this study, the researcher worked with the following hypothesis:



Ho: Lack of funds does not militate against government policies on Nigeria Pension Scheme.

H1: Lack of funds militates against government policies on Nigeria Pension Scheme.

Ho: Pension Scheme does not encourage the employees after retirement.

H1: Pension Scheme encourages the employees after retirement.

Ho: Pension scheme is not used in accounting principles.

HI: Pension scheme is used in accounting principles.


1.5  Research Question

1.  Is there any benefit of pension scheme towards employees retirement.

2.  Are pension scheme used in accountable principle s?

3.  Does lack of fund militate against government policies on Nigeria pension scheme?

4.  Does the pension fund use to invest cost saving to generate more money and employment in the economy.

5.  How many percent does employee pay as their gross monthly income?

1.6  significance of the study

Because organization especially private owned are so ignorant of the benefits of pension. This study will enable employers and organization to establish a pension scheme so that workers after their retirement can have something to fill back on.


The scope of study covered the period 1999 to 2004. It concentrates on Enugu State Public Service, which comprises the ministries, parastatals and teachers at primary and post primary institution in the State. It also looked through the pension scheme in Nigeria which dwelt on Decree 102 of 1970, Company and Allied Matters Decree (CAMD), which is for public service in Nigeria.

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A Study Of Impact And Implication Of Restructuring The Nigerian Pension Scheme