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Project Topic:

AN APPRAISAL OF THE CONVERGENCE OF PENSION FUND ADMINISTRATION IN NIGERIA WITH INTERNATIONAL STANDARDS

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 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 52 ::   Attributes: Questionnaire, Data Analysis ::   1,744 people found this useful

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CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND TO THE STUDY

Pension generally is a way of catering for the welfare of retirees. It is a periodicincome or annuity payment made at or after retirement to employees who has become eligiblefor benefits through age, earnings and service.According to Alo (2004), many countries of the world are currently grappling withpension reforms in the face of pressures from ageing populations.

Series of pension administration schemes have emerged in Nigeria before and after independence. Inthe words of Sule and Ezugwu (2009), the exact origin of pension fund administration in Nigeria isdebatable; however the history of pension in Nigeria could be traced to the prolonged battlebetween workers and employers of labour affirming that the victory of employees overemployers marked the privilege of receiving gratuity and pension in Nigeria.

The 1951 Pension Ordinance was the first legislative act on pension in Nigeriafollowed by the establishment of the National Provident Fund (NPF) in 1961 to cater forpension issues in the private sector. In 1979, the Pension Act No.102 was instituted and theArmed Forces Pension Act No. 103. Subsequently in 1987, the police and other governmentagencies pension scheme was established under Pension Act No.75 of 1987. Similarly in1987, the Local Government Staff Pension Board was established to take care of pensionmatters among local government employees (Sule and Ezugwu, 2006). The shortcomings andassociated impediments of the previous scheme heralded the National Social Insurance TrustFund (NSITF) in 1993, to address pension and retirement issues in the private sector. Pensionschemes in Nigeria over the years have always come from budgetary allocations, noncontributoryand not fully funded thereby creating bottlenecks, series of death after retirementdue to delay or lack of payment after retirement. These whole issues led to the 2004 pensionreform also known as the Contributory Pension Scheme.

The new pension scheme requires pension funds to be privately managed by licensed Pension Fund Administrators. Pension Fund Administrators (PFAs) have been duly licensed to open Retirement Savings Accounts (RSA) for employees, invest and manage the pension funds in a manner as the National Pension Commission (PENCOM) may from time to time prescribe, maintain books of accounts on all transactions relating to the pension funds 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.Before it is issued with an operating license, the Pension Fund Administrators must be a limited liability company whose sole object is the management of pension funds (PENCOM, 2005). To discourage frivolous applications and to ensure credibility, such company must have a paid up share capital of N1,000,000,000 and demonstrate professional capacity to manage pension funds and administer retirement benefits (PENCOM, 2005). The current Pension reform Act 2004 could be said to be in conformity with the international standard and best practices in Pension fund administration.

Some of the key indicators that indicate the convergence of pension fund administration towards international standard include to ensure that workers receive theirretirement benefits as and when due; assist improvident individuals save in order to cater for their livelihoodduring old age; and to establish a uniform set of guidelines and standards for administration and payment ofretirement benefits. However, the researcher is examining the convergence of pension fund administration in Nigeria with international standard.

 

1.2       STATEMENT OF THE PROBLEM

Pension fund administration in Nigeriahas been poor as the schemes were characterized by delays andsometimes non-remission of benefits to beneficiaries across the public sector. Orifowomo (2006) asserts thatinsufficient monitoring of pension activities by the regulatory authorities coupled with clear legal andadministrative sanctions for erring parties led to poor compliance by stakeholders. Furthermore, there were noprovisions for individual retirement savings account nor periodic publishing of statement of accounts and returns.Likewise, employees were not at liberty to choose their pension fund administrators and were subsequently at the mercy of the fund managers. The Pension Reform Act 2004 was enacted partly as a result of the failure of previous schemes to address thepension needs of Nigerians and partly as a result of the quest by stakeholders to evolve a scheme that wouldprovide for both the public and private sector employees and of international standard. The researcher is curious to ascertain if the pension reform system in Nigeria has converge with international standard considering the ineffectiveness, delays and poor services that has characterized the system.

 

1.3       OBJECTIVES OF THE STUDY

The following are the objectives of this study:

  1. To examine the issue of pension fund administration in Nigeria.
  2. To examine the level of convergence of pension fund administration in Nigeria with international standards.
  3. To identify the shortcomings in the pension fund administration in Nigeria

1.4       RESEARCH QUESTIONS

  1. What are the issues with pension fund administration in Nigeria?
  2. What is the level of convergence of pension fund administration in Nigeria with international standards?
  3. What are the shortcomings in the pension fund administration in Nigeria?

1.5       HYPOTHESIS

HO: Pension fund administration in Nigeria is not in convergence with international standards

HA: Pension fund administration in Nigeria is in convergence with international standards

1.6       SIGNIFICANCE OF THE STUDY

The following are the significance of this study:

  1. The outcome of this study will be useful for administrators in Pension fund administration in the process of streamlining the sector in line with international standard.
  2. The results of this study will also educate the general public on the benefits of better pension fund administration in Nigeria.
  3. This research will be a contribution to the body of literature in the area of the appraisal of the convergence of pension fund administration in Nigeria with international standards, thereby constituting the empirical literature for future research in the subject area.

1.7       SCOPE/LIMITATIONS OF THE STUDY

This study will cover the convergence of pension fund administration in Nigeria with international standards considering all the various pension reforms in Nigeria that are aimed at achieving best practices in pension fund administration.

LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

 Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

 

 

REFERENCES

Alo, Oladimeji (2004): Current Pension Reforms: Implications for Career Development inthe Public and Private Sector, a Paper Presented at the 2nd State Conference of the LagosState Branch of the Chartered Institute of Personnel Management of Nigeria (CIPMN)

National Pension Commission (2005). Frequently Asked Questions and their Answers onthe Contributory Pension Scheme in Nigeria. Available Online atwww.oauife.edu.ng/administration/registry/dloads/pencon/pdf.retrieve2/11/2012

Sule, K.O. and Ezugwu, C.I. (2009): Scheme on Employee Retirement Benefits of QuotedFirms in Nigeria. African Journal of Accounting, Economics, Finance and BankingResearch, 4(4), 48 – 58.

Orifowomo, O. (2006) A Critical Appraisal of Pension System Reforms in Nigeria. Gonzaza Journal ofInternational Law. 1(1) 1 – 15

 


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Paper Information

Format:ms word
Chapter:1-5
Pages:52
Attribute:Questionnaire, Data Analysis
Price:₦3,000
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