1

RETIREMENT POLICY AND PROBLEM OF

IMPLEMENTATION IN NIGERIAN PUBLIC SECTOR
(A CASE STUDY OF ENUGU STATE CIVIL SERVICE)

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ABSTRACT
The study Retirement policy and the problem of
implementation in Nigerian public sector was aimed at
determining the effects of old pension schemes (pay-as-you-
go-defined benefits) and they are corruption and inflation,
weak institutional capacity and non-compliance of stakeholders
which lead to non-implementation of the previous pension
scheme, thereby growing rise to the contributory pension
scheme (PRA 2004), as a way of strengthening the powers of
the operators of the scheme and promoting social investments
in the national economy. The survey method was adopted in
administering the questionnaires to the staff and retires of
Enugu state civil service and the Bourley’s formulae was used
to determine the sample size. the retirees complained that
they have experience difficulty in claiming their gratuity and
pension which have resulted for them not to enjoy their
retirement period, due to the challenges facing the defined
benefits scheme. The effective implementation of pension
reform act (PRA) 2004 would avert the hardship of retirees of
Enugu stage civil service after this retirement, thereby forcing
them into productive venture after retirement. To quicken the
dispensation of the pensioners benefits in term of gratuities
and pension, federal government establishes the national
pension commission which later licensed on fund
administrators (PFAS) and pension fund custodian (PFCS) for
effective operations of the scheme. Finally, relevant legal
framework should be put in place by the federal government to
ensure political economy and necessary support for the
scheme by subsequent government, and all hands should be
on deck to ensure the success and sustainability of the pension
reform act (PRA) 2004.
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TABLE OF CONTENTS

Title page

Approval Page

Approval Page

Dedication

Acknowledgements

Abstract

Table of Contents

Chapter One: Introduction

1.1 Background of the study

1.2 Statement of the Problem

1.3 Objectives of the Study

1.4 Hypothesis

1.5 Significance of the Study

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1.6 Delimitations/scope of the study

1.7 Limitations of the study

1.8 Definition of Terms/Acronyms

CHAPTER TWO: LITERATURE REVIEW

2.1 Origin and development of retirement policy

2.2 Retirement and Pension policy in the public sector

2.3 Overview of pensions scheme after 2004 Act

2.4 Management Structure and Implementations

2.5 Factors Responsible for non-Implementation of the

Retirement Policy

2.6 Legal Framework for the Implementation of the new

Retirement Policy (PRA 2004)

2.7 Funding and Safeguard of the Scheme

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CHAPTER THREE

RESEARCH DESIGN AND METHODOLOGY

3.1 Research Design

3.2 Population of the study

3.3 Sample Selection for the study

3.4 Sampling Technique

3.5 Method of Data Collation

3.6 Validation of Research Instruments

3.7 Reliability of the Instrument

3.8 Method of Data Presentation and Analysis

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Data Presentation

4.2 Data Analysis and Interpretation

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4.3 Test of Hypothesis

CHAPTER FIVES: SUMMARY OF FINDINGS,

CONCLUSION AND RECOMMENDATIONS

5.1 Summary of Findings

5.2 Conclusions

5.3 Recommendations

Bibliography

Appendix
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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Retirement can be seen as the period of time in an

employee’s, employment life when he or she has

satisfactorily served the organization, that employed year

of the contract.

This is a period in an employee life when he or she

separates from his or her job because of their age. This is

also a period when the employee has spent a specified

period of time with the employer which qualified the

employee to be retired.

Usually, employees serve for thirty five years and yet

retired in the public service or are retired at the

reliamentage of six five years for both men and women

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when an employee has satisfied the employment

requirements and has retired from work, he or she is

supposed to receive a relative amount of money is usually

paid to a retiree (a retired employee). This amount may

come in regular form (either monthly or quarterly)

sometime, most pension schemes require employees to

contribute part of their earning (usually 6 or 7%) to

pension fund from which they will later receive as pension,

these are called contributory schemes. This are other

pension schemes. This implies that the employer bears the

full cost of paying pension to its retirees.

When an organization applies the contributory

pension scheme, it usually employs the services of a

pension fund administration (PFA). This is a thirty party

organization employed by the employer or both the

employer and the employee (in the case of contributory

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pension scheme) to manage the funds that will eventually

be used to pay the pension of employee.

The pension is very important to the retiree because

he/she can be able to earn a living from it in his or she old

age.

The government being the biggest employee of

labour has a major role to play in determining the

standard of retirement policy in the country.

It is whatever the private sector see the government

implementation that they will want to implement to set

high standards (making it possible for the retirees to enjoy

the best terms of their retirement benefits). So that the

private sector will not have to fall too short of required

standards by implementing very poor pensions and

gratuity at the end of a very meritorious services to the

organization.
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1.2 STATEMENT OF THE PROBLEM

The non-payment of gratuity and pension to retirees

has become a recurrent phenomenon in Nigeria since the

attainment of political independence. This has seriously

affected most of the public sector. These are people who

have services their country at all levels and when they are

useless. The Nigerian pensioners (especially those from

the public sector) stay for months or years without

receiving their retirement benefits to enable them survive

after their meritorious service to the nation some of them

even die before their benefit are paid.

Recently, the guardian newspaper of Monday,

February 6, 2010 in an article titled pensioners. Their

regrets, their expectations, related the death of one Mr

Agboola T. Sunday – a retired senior supervisor in the

accounts departments of the Nigerian railway cooperation

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Mr Agboola died from an ailment which member of his

family believed could have been cured if he had been

taking drugs recommended for him. According to his son

jude our father could not buy drugs which he most needed

because he had no money. He had not been paid his

pensions for the past 15 months and all other avenues for

succor has been exhausted if the government had

remembered and paid him his due after 30 years of

service to his fatherland, he wouldn’t have died. What

befall Mr Agboola happened to be hundred of retired public

officers who spend the youthful part of their lives at work

only to be allowed to die in want and hunger. This is the

predicament of the embattled Nigeria public servants for

instance at the town planning department here in Enugu

state it takes an average of two years to get any

entitlement paid. That is why it is alleged that most people

earning their retirement age fell uncomfortable because

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they may have to wait longer than necessary to get

entitlement.

The plights of retirees can best be imagined

especially now that the home of pay of an average civil

servant can hardly take them home. Though the minimum

wages of civil servant has been raised by the federal

government to at least to alleviate their sufferings, but the

issue goes beyond minimum wage for pensioners.

The fundamental problem is that of delay of payment

if the stipend come in as at when due, perhaps the

pensioners may well adjust to the diet state of their times

and wherever the money takes then they live the rest

before the next stipend comes in.

But this is not the situation pensioners are groaning

under a heavy yoke, the stipend is small and it is not

coming at all.
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This study will attempt to examine the impact of

implementation of retirement policy on the retirees inline

with the question stated below: what impact does the

implementation of retirement policy have on the retirees

of the Enugu state civil services?

1.3 OBJECTIVE OF THE STUDY

The study aims to asses the impact of retirement

policies on the social welfare of retirees of the Enugu state

civil service over the years and how best to improve these

policies in order to meet the desire of the retirees.

This study aims to unearth the problems that lead to

lack of implementation of retirement policies of both the

federal government in Nigeria which in turn brings in told

hardship to the retiree , lastly the study intends to make

recommendations (where necessary) on how to improve

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the living standard of retired civil servant especially those

in Enugu state.

1.4 HYPOTHESIS

H0: The implementation of retirement policy in Enugu

state civil service has no adverse effect on the

retirees.

HI: The implementation of retirement policy in Enugu

state civil service has an adverse effect on the

retirees.

There by, subjecting them to untold hardship.

Test Of Hypothesis

In testing this hypothesis, emphasis will be based on

the responses from the population concerned, who will

through the questionnaire indicate the effect of the

implementation of retirement policy on them. Such indices

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as the amount of gratuity and pension of the retirees in

relation to the prevalent nature of the economy, the

consistency of payment of the retirement benefit, the

financial situation of the retirees and how it has affected

both their lives and that of their families their level of

defense on the monthly payment, how it has changed

their standard of living will be used. Taking the population

into consideration, the level and nature of their responses

to the implementation of retirement policy on them, if the

level of positive response to the question is 50% or above

50% the alternative hypothesis HI. The implementation of

retirement policy in Enugu state civil service has an

adverse effect on the retirees will be accepted. But when

the level of response is below 40% the null hypothesis H0

– the implementation of retirement policy in the Enugu

state civil service has no adverse effect on the retirees will

be accepted.
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1.5 SIGNIFICANCE OF THE STUDY

The importance or significance of the study cannot be

over looked in view of the fact that not much work has

been done by scholars in relation to this study.

Hence this research work will go a long way in

contributing to the existing literature on retirement policy

and service in general and the Enugu state civil service in

particular and how this impact on both the retirees and

the worker nearing retirement.

Also, this work will serve as information media to the

general public, most especially the young and the Nigeria

retirees and the need to make adequate preparation,

psychologically, socially and otherwise before retirement.

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1.6 DELIMITAION/SCOPE OF THE STUDY

This study on retirement policy and problems of

implementation in Nigerian public sector ( a case study of

Enugu state civil service). The target population is the

staffers of Enugu state civil service the findings and

recommendation will all be applicable of other commission

across the country.

1.7 LIMITATION OF THE STUDY

The motivation of the researcher were owed to its

peculiarity and their area of specialization like every

research work.

However because of some constraints such as

finance, cooperation and time limit given for this study.

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(a) Finance: Due to the economic situation in the

country there was not enough money for the

researcher to execute the research as desired.

(b) Cooperation: during the course of obtaining data

for the research work most people were not willing

to provide the information that could help and

some totally refused the questionnaire.

(c) Time limit: the interval between the choosing of

project topic, conducting the research writing of

the project and submission of project was very

inadequate, as preparation is done together.

Finally adequate information was gathered from as many

sources as possible to make this research workable,

authentic and reliable.

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1.8 DEFINITION OF TERMS/ACRONYMS

The following are the meanings of the terms used in this

research study.

Public policy

Some scholars believe that public policy is what

government chooses to do or not to do, others assert that

policy is what government actually do and not what they

intend to or say are going to do.

Retirement

Different scholars view retirement in so many ways, But

all agree that an employee of a government establishment

officially retires at a maximum age of 65 or a working year

of 35 years. Retirement is a process that involves

withdrawing from a job and taking up the roles of a retired

 21

person. It is an inevitable part of life and a time of

adjustment.

Smith, CM (1974) state that retirement is for most

people the only part of their live when they have the

theoretical opportunity to dispose of their time as they

wish which most time are frequently not fulfilled due to

lack of money, health and society’s attitude towards them.

Kimmel D.C (1982) described retirement in three

ways namely: Retirement as an event, status and a

process.

As an event retirement signals the end of work and

beginning of leisure. As a status, retirement concerns a

change in social position involving roles and expectation

different from those that characterized the person’s life

during working years. As a process, retirement is a reality

for which a person can prepare.

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Retirement is seen as a time of significant transition

people of advanced years in age experience when they

leave the position of their day to day full time employment

under the strict control and supervision of an employer of

another different situation of self employment which

involves nearly absolute self management.

While head Evelyn and James declare to be retired is

to be old at least as society sees it, it involves taking on

new tasks, letting go off previous responsibilities and

changing in response to the demands of on-going

relationship. It is a special period or opportunity for

learning and growth.

Olagboye A.A (1998) sees retirement as a

government scheme guided by policy that if well handled

could lead to happiness but otherwise to frustration and

disaster.
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CHAPTER TWO

LITERATURE REVIEW

2.1 ORIGIN AND DEVELOPMENT OF RETIREMENT

POLICY IN NIGERIA

The practice of working to earn a wage as means of

existence is relatively new phenomenon in most

developing countries, particularly African countries or

continent most Africans engage in subsistence agriculture

on it available vast and arable farmland, while a few

engaged in cattle rearing or cotton industry like weaving

or black smithing. The African people were mostly self

employed.

The idea of working for another person no matter

his/her status in the society and even for payment of

wages was considered degrading becauseit was associated

 24

with slavery. With the colonization of the continent things

began to change, by introducing local labour to run their

administration and develop the infrastructure that would

facilitate the exploitation of both natural and agricultural

resources of the African territories in order to feed their

home industries with the basic raw materials and funds.

The people were therefore forced against their will to

work for payment to the colonial government for instance,

lord fedrick luggard resorted to a policy of forced labour

with pay in order to secure sufficient labour needed for

railway/road construction in Nigeria in 1918. Though the

forced labour policy was discontinued in the 1930’s for a

number of socio-economic reasons the institution of wages

employment had by then become established.

The foundation for the present labour laws and

practice in the African continent was this laid by the

 25

colonial administrators. Thus, the practice where by

workers in the modern economy are granted annual or

periodic leave away from their work as well as formal

retirement from active work originates from he colonial

period. The first public sector pension scheme in Nigeria

was the pension ordinance of 1951 with retroactive effect

from January 1, 1946. The law provided public sector

employees with both pension and gratuity. This was

however, complemented by pension decree 102 and 103

(specific to the military) of 1979 were enacted with

retroactive effect from April 1974 section 171,208 and 309

of the independence constitution of the federal republic of

Nigeria decree No12 of 1989 stipulates the protection and

regulation of the gratuity and pension rights of employees

in the public service at the local state and federal

government levels and this constitute primary source of

pension laws and regulations in the control. In 1992, for

 26

instance, the qualifying period for gratuity and pensions

were reduced from 10 years to 5 years and from 15 years

to 10 respectively. In 1997, parastatalswere allowed to

have individual pension arrangements for their staff and

appoint board of trustees (BOT) to administer their

pension plans as specified in a standard trust Deed and

rules prepared by the office of the head of service of the

federation. Each BOT was free to decide on whether to

maintain an insured scheme or self-administered

arrangement (Oshiomole 2007 in Onyeonone, 2010).

The first private sector pension scheme in Nigeria

was set up for the employees of the Nigerian breweries in

1954 followed by united African company (UAC) in 1957.

National provident friend (NPF) was the first formal

pension scheme in Nigeria established in 1961 for the non-

pensionable private sector employees. It was largely a

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saving scheme contributed by both employees and

employers on monthly basis. The scheme provided for only

one-off leemp sum benefits with the establishment of the

Nigerian social insurance trust fund (NSITF) by decree NO

73 OF 1993 which was aimed at providing enhanced

pension scheme top private sector employees, the NSITF

took over the assets of the NPIF and commenced

operations in July 1994 thus, all registered members of

the NPF became automatic members of the NSITF.

Similarly, all private sector employers and employees were

mandated to register as members as soon as they

commence operations and assumed duty respectively.

Pension activities were regulated in the pre -2004 era

by three bodies namely.

1. Securities and exchange commission (SEC) that

licensed pension fund managers.

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2. National insurance commission (NAICOM) responsible

for licensing and regulating insurance companies in

the country.

3. And the joint tax board (JTB) which approved and

monitored all private pension schemes with enabling

powers from schedule 3 of the pension income tax

decree 104 of 1993 (Onyeonoru 2010:4).

Hence the old pension scheme in the public sector was

characterized as follows:

Benefits were met on a pay as you go (PAYG) basis with

significant pension and gratuity arrears.

Significant unfunded federal government pension and

gratuity obligations. Some estimates exceeded N250

billion ($2.08 billion) (conversion rate was N120 per $1).

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The system did not deliver financial security in retirement

at the private sector level funded provident funds – based

on basic salary.

Pension arrangements were anchored on banks and oil

companies.

Unfunded structured gratuity arrangements

Responsibility was paced on the Nigerian social insurance

trust fund (NSITF).

2.2 RETIREMENT AND PENSION POLICY IN THE

PUBLIC SECTOR

During retirement a retiring public officer usually

receives certain benefits in the form of gratuity and

pension. Gratuity according to oxford advanced learners

dictionary means money that is given to employees when

they leave their jobs (retired). Amid (1975) defined

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gratuity to be the sum total leemp paid to a worker on

exiting from the service, either through withdrawal or

retirement, while pension is the sum of annuity

periodically, usually monthly, to a public servant who

disengages from active service after attaining a specified

age limit usually 60 years old or 35 years in service.

Gratuity and pension are post employment benefits which

are designed to prevent a sudden sharp drop in the

financial capacity and living standard of the workers as

would happen with the stoppage of his monthly salary and

allowances after disengagement from active employment.

The total sum or gratuity paid is meant to enable the

retiree finance any post-retirement endavour of his/her

choice while the pension replaces the monthly salary the

retirees get while in active service. In this way the retiree

having spent a substantial part of his/her productive life

 31

working to earn a living so that at retirement he/she can

sustain and maintain a standard of living comparable to

what it was while in active service. Most public

organization operated a defined benefits pay-as-you-go)

scheme final entitlements were based on length of service

and terminal emoluments the defined benefit (DB) scheme

according to Balogun (2006) was funded by the federal

government through budgetary allocation and

administered by the pensions department of the office of

head of service of the federation.

The major status and statutory regulations for the

management and administration of public service pension

in Nigeria includes:

- National provided fund (NPF) scheme of 1961.

- The pension act No102 of 1979.

- Armed forces pension act No103 of 1979.

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- The police and other government agencies pension

scheme was enacted under pension act No75 of

1987.

- The local government pension edit which culminated

into the establishment of the local government staff

pension board of 1987.

- The national social insurance trust fund (NSITF)

scheme established by decree No73 of 1993 which

replaces the defund NPF scheme taking effect from

1st July 1994.

- Pension reform act of 2004

- Most recently pension reform act (as amended in

2010).

Generally, the pension scheme in Nigeria were largely

unregulated without any standard or supervision and

highly diversified before the advent of the pension reform

 33

act that the federal government constituted various

committees (headed by chief Ajibola Ogunsola and Mr Fola

Adeola) at different times to look into the challenges of

pension schemes in Nigeria and proffer workable solutions.

It was the total Adoola committee report that was enacted

into the pension reform act (PRA) and come into

operations on 1st July 2004 which was later amended in

2010.

2.3 OVERVIEW OF PENSIONS SCHEME AFTER 2004

ACT

Balogun (2006:8) states that the primary goals of a

pension system should be to provide adequate, affordable,

sustainable and robust retirement income, while seeking

to implement welfare-improving scheme in a manner

appropriate to the individual country. The design of a

pension system or its reform must explicitly recognize that

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pension benefits are claims against future economic

outputs.

Reform however, should be designed and

implemented in a manner that supports growth and

development and diminishes possible distortions in capital

and labour market. The pension reform act (PRA) of 2004

became operated on 1st July 2004 thereby establishes a

defined contributory (DC) pension scheme as against the

erstwhile defined benefits (DB) pensions system for all

employees of the federal public service i.e Enugu state

civil service) and the private sector or Nigeria.

The pension reform act (PRA) 2004 provides among

others the following objectives:

- Ensure that every retired workers receives his/her

retirement benefits as and when due.

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- Assist improvident individuals by ensuring that they

save in order to cater for their livelihood during old

age.

- Establish a uniform set of rules regulations and

standards for the administration and payments of

retirements benefits for the public service of the

federation federal apital territory and the private

sector.

- Establish a sustainable pension system hat empowers

employees to have control over their retirement

savings account (RSA) promotes labour mobility and

minimizes incentives for early retirement.

- Ensure transparent and efficient management of

pension funds (pension reform act of 2004). The

structure of the contributions is as provided in section

9, subsection 1 of the pension act 2004.

 36

a. In the case of the public service of the federation and

FCT.

i. A minimum of seven and half percent by the

employer.

ii. A minimum of seven and half percent by the

employee.

b. In the case of the military

i. A minimum of twelve and a half percent by the

employer.

ii. Minimum of two and half percent by the employee.

c. In other cases

i. A minimum of seven and a half percent by the

employer and

ii. A minimum of seven and a half percent by the

employee all on basic salary housing and transport

allowance.
 37

The act provides that any voluntary contribution that is

not withdrawn within five years is tax free.

Employees exempted from the scheme (Judicial

officers all existing pensioners) are also entitled to make

voluntary condition. Also section 9(a) of the PRA 2004

provides that an employer may elect to bear the full

burden of the scheme provided that in such a case the

employer contribution shall not be less than 15% of the

monthly emoluments of the employee.

d. In addition to the specified rate of contribution every

employer is required to maintain life insurance policy

in favour of each employee for a minimum of three

times the annual total emoluments of the employee

section 9(3).

e. The act (section 9(b) provides that the rates of

contribution may be reviewed upwards upwards upon

 38

agreement between any employer and employee

from time to time and national pension commission

(pen com) should be notified of such revision.

Monthly contributions and retirement benefits in the

PRA 2004 are tax (PRA: 2004).

2.4 MANAGEMENT STRUCTURE AND

IMPLEMENTATION SCHEME

1. National Pension Commission (PENCOM)

Central to the administration of the new pension

scheme in Nigeria is the national pension commission

(NPC) a government agency whose principal objective is to

regulate supervise and ensure the effective administration

of pensions matters in Nigeria. The NPC will achieve the

above by ensuring that payment and remittance of

contributions are made and beneficiaries of retirement

savings accounts are paid as and when due. The NPC

 39

ensures that pension funds are safe through the insurance

of guidelines and regulations for licensing approving

regulating and monitoring the investment activities of

pension funds administrators and custodians. The

commission stands as a watchdog with the overriding

objectives of ensuring that all the pension matters are

administered with minimum exposure to fraud and risk.

ii. Pension Fund Custodian (PFCS)

They are appointed by pension funds administrators

(PFA) and are responsible for the warehousing of the

pension fund assets. The PFCS receive the total

contributions remitted by the employer on behalf of the

pension fund administrator within 24 hours of the receipt

of contributions from any employer and credit that RSA of

the employee. The custodian would execute transactions

and undertake activities relating to the administration of

 40

pension fund investments upon instruction by the PTA

before it is issued with an operating license, the pension

assets custodian must be a limited liability company

incorporated under the companies and allied matters act

and a licensed financial institutions. The custodian shall

hold pension fund assets on trust for its clients.

iii. Pension Fund Administrators (PFAS)

They are limited liability companies duly licensed by

PENCOM as specified purpose vehicles to carryout pension

business only. They open RSA for employees invest and

manage the pension funds in a manner as the NPC may

from time to time prescribe maintain books of accounts on

all transactions relating to pension funds managed by it,

provides regular information to the employees or

beneficiaries and pay retirement benefits to employee in

accordance with the provisions of the pension reform act

 41

2004. Its paid up share capital of N150,000000 or such

sum as may be prescribe from time to time by the NPC.

iv. Approved Existing Schemes

Many private sector organizations and self funding

public organizations had pension scheme existing prior to

the contributory pension scheme. The PRA has provided

that organizations running such scheme may wish to apply

for the continuation of the scheme for their employees.

However the schemes must fulfill certain conditions

including the separation of the assets of the scheme from

the assets of the organization and the management of the

schemes must be transferred to licensed PFAS where there

are funding gaps the organizations must offset such

funding gaps within 90 days. Similarly the scheme must

be limited to existing members and any employee who

 42

would like to exercise the option of joining a PFA must not

be compelled to continue on the existing scheme.

v. Closed Pension Fund Administrators (CPFA)

In addition to the approved for continuation of the

existing scheme organizations who would like to manage

their existing schemes shall apply to national pension

commission for license to operate as a CPFA. The asset of

the pension fund must be at least N500,000,000 in the

event that assets of the scheme are less than

N500,000,000 such schemes should be managed by a

PFA.

vi. Six Pension Departments

The PRA 2004 has established six pension

departments to continue the administration of pension for

non private sector organizations covered by the

 43

contributory pension scheme. The established

departments are: military police, civilian, customs,

immigrations and prisons other security agencies and FCT

pension board use retransformed into respective pension

departments. The national pension commission will

supervise these pension departments.

Vii The Nigerian Social Insurance Trust Fund

(NSTF)

Contributors under the NSITF act shall at least five

(5) years after the commencement of the contributory

pension scheme move the assets standing to their

retirements saving account (RSA). However, the pension

fund assets held by NSITF shall be transferred to a

custodian. NSITF shall also be supervised and regulated by

the commission. Contributors to the NSITF scheme can

 44

obtain their accounts details from trust fund PFA the

pension fund administrator registered by NSITF.

viii. Retirement Benefit Bond And Redemption Fund

The retirement benefit bond, redemption fund has

been establishment and maintained by the central bank of

Nigeria. The federal government has been paying amount

equal to 5% of the public service of the federation

parastatals other bodies of the federal government and

the military into the fund. The total amount in this fund

shall be used to redeem all retirement benefit bonds

issued payment into this fund shall cease after all

retirement benefits bonds have been redeemed.

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2.5 FACTORS RESPONSIBLE FOR NON-

IMPLEMENTATION OF THE RETIREMENT POLICY

It is noteworthy that the pension reform was part of

the overall non-liberal reforms in the post 1980 Nigeria

that placed emphasis on the private sector led economy. It

is as a result of the failure of the pay as you go(PAYG)

system arising from several factors.

These factors according to Oneonoru (2010) Chiejina

(1995) and Grindle (1980) includes:

i. Declining contributions: registered members were

not meeting up their contributions due to output

contraction and arising system dependency ratio

(ratio between the population age of 65 and

above) and reflecting both the decline in the

number of contributors and the growth in the

number of pensioners (world bank: 1994).

 46

ii. Institutional weakness: the failure of the

administrative processes resulted in the ability of

the scheme to enforce compliance leading to large

evasions and ineffectiveness, hence, the inability

to meet the objectives for which it was established.

iii. Inexperienced board of trustees; according to

Onyeonoru (2010) investment decisions were

unduly influenced by the board of trustees who

lacked the requisite experiences to take such

decisions thereby resulting to difficulties

encountered in the scheme.

iv. Structural adjustment programme (SAP) policies:

this was imposed on Nigerians by the international

monetary fund (IMF) and the world bank in the

area of devaluation and deregulation which

resulted in employee demotivation and draining

 47

away of high skilled professionals to higher paying

private sector organizations

Table 2.1 shows that salary structures of public servant.

Table 2.1 real take home wages and salaries in public

sector

Years Naira Per Month

Grade level Grade level Grade level

1979 – 244.00
01 737.22 1947.70

1983

1984 – 164.29 427.64 1064.06

1988

1989 – 149.23 272.64 576.14

1993
 48

1994 – 82.1 198.2 369.7

1998

1999 – 139.4 340.3 728.9

2003

2004 –

2010

Source: national bureau of statistics Nigerian fact sheet.

v. The wage salaries crisis: real take home monthly

wages and salaries in the public secotr (e.g Enugu

state civil service) reflect the amount realized by

deflating nominal salaries/wages with the

consumer policy index. Wages and salaries include

basic salary and allowances, less taxes and other

deductions. Real take home wages and salaries is

 49

a mildstone for understanding full impact of

inflation to purchase power of local currency. This

decline in real public sector wages between the

period 1979 – 1983 and 1999 – 2003 as seen in

table 2.1 above is a result of lay offs/compulsory

retirement of public sectors employees thereby

having a lean workforce. For instance, 1996, there

was mass retirement of Nigerian railway

cooperation workers resulting to high incidence of

pensioners and default on the part of government

to meet up with their pension money. As at 2004

railway pensioners were owed 37 million dollars

(20 months pension money).

vi. Corruption: the sense of amorality associated with

political office holders where there was looting of

public funds and siphoning them abroad, these

weakened the public sector and worsened its

 50

effectiveness and efficiency. There was also high

level of corruption in the department of military

pensions and in Enugu state civil service with high

numbers of fake pensioners who had collaborated

with the officials.

vii. Lack of fiscal discipline, irregularities and diversion

of pension fund: the activity of pension

administrators were characterized by lack of fiscal

discipline, irregularities and diverting pension

funds to other uses thereby placing limitation on

the amount of funds available to care for monthly

emolument of both the military and civilian

pensioners.

viii. Lack of transparency: the PAYG scheme lack

transparency in its administration and this lead to

corrupt practices that are still bedeviling the

payment of benefits to those exempted from the

 51

contributory pension scheme. Also there is no clear

separation between pension assets and institutions

assets.

ix. Nigeria weak institutional capacity: the political will

to exercise authorities over the retirement and

pension policy in the country was weak and this

have resulted to weak institutional capacity to

implement the state objectives and monitor its

growth.

x. Rising inflation: pension assets and investment

have been competing with the increasing level of

inflation over the years thereby lowering the value

of real investment.
 52

2.6 LEGAL FRAMEWORK FOR THE IMPLEMENTATION

OF THE NEW RETIREMENT POLICY (PRA 2004)

The pension reform act 2004 a compulsory

contributory pension scheme (CPS) has been established

for all categories of workers in the federal public service

federal capital territory and in the private sectors of the

Nigerian economy. The scheme (PRA) according to Atedo

(2006:19) is a marked departure from the pay-as-you-go

defined benefit (PAYG-DB) schemes that existed in the

public sector and improves the pension situation in both

the private and public sectors by making full funding of all.

Schemes compulsory: the PRA provides for certain

categories of existing schemes to apply to the PENCOM

(NPC) for continuation although they are still required to

be managed in accordance with the act. The new scheme

(PRA) is a defined contribution scheme in which monthly

 53

funded contributions are made by employee and

employers. The funded contributions are held by a pension

fund custodian (PFC) and managed administered on the

contributors behalf by a pension fund administrator (PFA)

of the employee’s choice. Where existing scheme have

been approved for continuances such schemes must be

managed by a closed pension fund administrator (CPFA)

which is also licensed by PENCOM where the company

wishes to continue management or outsourced to a PFA.

Assets belonging to such schemes must be transferred to

a PFS for custody. Such schemes must be valued and fully

funded on an annual bases. The pension reform act (PRA)

2004 as the most recent legislation of the federal

government at reforming the pension system in the

country. Ahmed (2006:2) states that PRA established a

uniform pension system for both the public and private

sectors. Similarly for the first time in the history of the

 54

country a single authority has been established to regulate

all pension matters in the country.

The following were the legal framework for the

implementation of pension reform act 2004.

i. Coverage and exemption: the law made it

mandatory for all workers in the public service of

the federation and the federal capital territory and

workers in the private sector (where the total

number of employees is 5 or more) to join the

contributory pension scheme. However, existing

pensioners and workers that have three (3) years

or less to retire in accordance with the terms of

their contract of employment are exempted from

the scheme. Also exempted are the categories of

pensions under section 291 of the 1999

 55

constitution of the federal republic of Nigeria but

they have option of making voluntary contribution.

ii. Informal sector participation: section 9(4) of the

PRA 2004 has allowed for voluntary contribution

thereby providing for the self employed and those

working in organizations with less than 5

employees to open RSAS with a PFA of their choice

and make the necessary contributions.

iii. Contributory scheme: under the PRA 2004, the

employees contribute a minimum of 7.5% of their

monthly emoluments but the military contributes

2.5% employers also contribute 7.5% in the case

of the public sector and 12.5% in the case the

military. Employers and employees in the private

sector contribute a minimum of 7.5% each of their

monthly emoluments. An employer may elect to

contribute on behalf of employees such that the

 56

total contribution shall not be less 15% of the

monthly emolument of the employers. An

employer is obliged to deduct and remit

contributions to a custodian within 7 days from the

day the employee is paid his/her salary while the

custodian shall notify the PFA within 24 hours of

the receipt of contribution and retirement benefits

are tax-exempt.

iv. Fully funded: the contribution of an employee is

deducted monthly from employees salary while the

employer will provide the counter contribution for

the employee which will both be transferred to the

relevant retirement savings account. By so doing,

the pension funds exist from the on-set and

pension assets are enough to meet all pension

liabilities.
 57

v. Individual account: each employee open a

retirement savings account (RSA) in his/her

individual account. This account belong to the

employee and will remain his/her own for life, even

if he/she changes employers or pension fund

administrators (PFA) the employee may only

withdraw from this (RSA) at the age of 50 years or

upon retirement thereafter. An employee can

withdraw a lump sum of 25% of the balance

standing to the credit of his RSA provided that if

he/she is less than 50 years at the time of

retirement and he/she could not secure a new job

after six months from leaving the last joy.

Similarly, he can withdraw a lump sum of amount

more than 25% if he/she is 50 years or above at

the time of retirement and the amount remaining

after the lump sum withdrawal shall be sufficient to

 58

procure an annuity or fund programme

withdrawals that will produce an amount not less

than 50% of his/her monthly remuneration as at

the date of his/her retirement. The balance after

lump sum of payment can applied in a programme

periodic withdrawal or to purchase an annuity for

life through a license life insurance company with

periodic payment.

vi. Life insurance policy: every employer shall

maintain life insurance policy in favour of an

employee for a minimum of three times the annual

emolument of the employee (PRA) section 9(3).

vii. Benefits of a missing or deceased employer: a

person declared missing for one year, will be

presumed dead upon confirmation by a board of

enquiry setup by pen com. Where an employee

dies his/her entitlements under the life insurance

 59

policy shall be paid into his RSA and the PFA shall

apply or disburse the balance in the account in

favour of beneficiaries of:

(a) a will prepared by the deceased.

(b) Spouse(s)/children of the deceased

(c) Recorded next of kin (NOK)

(d) Approved administrator of the estate of the

deceased.

viii. Approved fees structure: PENCOM approved the

following fees structure for services rendered by

operators of the contributory scheme (PRA):

PFA/CPFA – are to charge N100.00 per month per

account holder as administrative fee and 2% of the

value of assets managed as managed fee PFC – A

custodian is allowed to charge 0.6% of assets

managed as management fee.

 60

PENCOM (NPC) is entitled to 0.4% of the total

pension fund assets to enable it, run its operations of

the PRA.

ix. Investment of pension fund: the act provides that

all contributions into the RSA of employee should

be invested by PFA with the objectives of safety

and maintenance of fair returns on amount

invested. The stipulated guidelines on investment

limit by PENCOM are stated in section 72 of the

pension form act (PRA).

x. Penalty for non-compliance with the act: any PFA

who fails to comply with any provision of the act

(PRA) shall be liable to a penalty of an amount not

more than N500,000 for each day that the non-

compliance continues and the PFA shall forfeit the

profit from that investment has led to a loss the

 61

PFA shall provide for the loss operators are also

liable to pay N/million for violation and/or 1 year

improvement. Pen com shall revoke license of

operators for persistent contravention and also

punish employers for violating the provision of the

act.

xi. Supervision and examination: the act provides that

the pencom shall at least once in each year

authorized an inspection or examination or

investigation of PFAS, PFCS or the pension

department for the purpose of determining

whether or not the provision of the act or any

regulations made there under are being complied

with and effective sanctions made where there is

violations.
 62

2.7 FUNDING AND SAFEGUARD OF THE SCHEME

The success of the pension reform is hinged on the

availability of funds to contributors when they retires

protecting this funds and applying sanctions and penalties

where there is default among the operators of the Act. For

effective implementation of the retirement/pension policy

and the realization of the stated objectives and also it

benefits to the national economy, the PRA made some

strict provisions in the guidelines and regulating issued by

the national pension commission, they are.

- Clear separation of the functions of the PFAS and PFC

such that it is difficult for both to misuse the pension

funds assets to the detriment of the contributors.

- Insurance of guarantee to the full sum and value of

the pension funds and assets held by it or to be held

by it.
 63

- Government contribution shall be a charge on the

consolidated revenue fund (CRF) of the federation.

- Investment of pension fund assets can only be made

on the floor of the Nigeria stock exchange (NSE)

recognized by the securities and exchange

commission or a money market platform approved by

the central bank of Nigeria (CBN) or money market

association of Nigeria. All instrument must have

rating grades stipulated in the investment regulations

issued by pencom before fund assets are invested.

- All pension fund operators must fully comply with the

provisions of the PRA 2004 as well as all guidelines

and regulations issued by pencom (NPC)

 64

CHAPTER THREE

RESEARCH DESIGN AND METHODOLOGY

3.1 RESEARCH DESIGN

The choice of any research method to be used in any

study depends on the objectives of the study and/or the

nature of the problem under investigation. Research

design according to Ozo, Odo, Ani and Ugwu (2007:173)

as the analyzing the data necessary to help solve the

problems at hand, such that the difference between the

cost of obtaining various levels of accuracy and the

expected value of the information associated with each

level of accuracy is maximized. In Ogbuoshi (2006:144)

research design is an outline or scheme that serve as a

useful guide to the researcher in his/her efforts to

generate data for his/her study. While in kotler and keller

(2006:98) designing a research plan calls for decisions on

 65

the data sources, research approaches, research

instruments, sampling plan and contact methods.

Therefore, this study would adopt, survey method which

according to Udeze (2005:76) involves asking respondents

through administering of questionnaire in a research

exercise like this, and such respondents must have had

experience in the phenomenon under study.

3.2 POPULATION OF THE STUDY

Population in research means the totality of the

objective of study in a giving location (Ozo, et al

2007:179). The idea of determining the population is to

give the research focused. The population of the study

must be clearly defined and identified. The total number of

staff in the Enugu state civil service are forty-five (45) and

they form the population of the study.

 66

3.3 SAMPLE SELECTION FOR THE STUDY

Sampling according to Ogbuoshi (2006:83) is a

process of getting a proportion or a fractional part from

the population and sample refers to subset (small group of

subjects) drawn through a defined procedure from a

specified population. The idea of determining sample size

according to Ozo et al (2007:181) is to obtain a part of the

population from which some information of the entire

population can be interred and this sample must reflects

the opinion, attitudes or bahaviours of the entire

population. Udeze (2005:143) states that a good sample

must be adequate in terms of being sizeable to show

confidence in the stability of its characteristics and must

be representative as well.
 67

3.4 SAMPLING TECHNIQUE

The sampling used for the study was simple random

sampling technique. This is because simple random

sampling is a procedure in which all the individuals in the

defined population have an equal and independent chance

of being selected as a member of the sample so as to be

representative of the population from which they are

drawn.

n = ___N___

1+N(e)2

Where n = sample size

N = population of the study

e = error of tolerance is 5% i.e 0.05

1 = unity and it is constant

 68

Substituting these values in the formula above

n = ___45_____

1+45(0.05)2

n = ___45_____

1+45(0.0025)2

n = ___45_____

1+0.115

n = ___45_____

1.1125

n = 40.449

n = 40 approximately
 69

Therefore the sample size for this study is 40 staff,

selected among the staff of Enugu state civil service.

3.5 METHOD OF DATA COLLECTION

The following are the instruments used for data

collection for this study.

i. Questionnaire: kotler (2005:133) states that a

questionnaire consists of a set of questions

presented to respondents while Ogbuoshi

(2006:119) say the questionnaire is a useful tool in

getting the feelings, beliefs, experiences or

activities of respondents. The questionnaires are

carefully designed using simple vocabulary

administered to respondents. Ti s is a closed ended

questions (with alternative options) that is concise,

brief and precise so as to obtain the needed

information for this study.

 70

ii. Personal interview: This refers to an interpersonal

communication whereby a researcher asks

respondents in designed questions so to obtain

relevant answers on the topic under study. This

involves eliciting information from the respondents

through some verbal interaction between the

interviewers and the interviewee (Ogbuoshi

2006:131) some top management staff of the

Enugu state civil service were selected and

interviewed and their options and responses were

documented.

iii. Documentary evidence: the new international

websters encyclopedia dictionary of the English

(2003) defined documentary as an original piece of

written or printed matter conveying authoritative

information or evidence. Documentary evidence,

contain vital information necessary for a good

 71

research work and they are fact five of the case

study.

3.6 VALIDATION OF RESEARCH INSTRUMENT

Designing the research instruments is one of the most

important exercise involved in a research instruments that

is said to be a formularized schedule for obtaining and

providing specified and relevant information with tolerable

accuracy and completeness (Ozo et al 2007:198) certain

techniques were incorporated into the questionnaire to

test its validity in respect of the research instruments that

were used in the response elicited.

To further check the validity of the response the

person selected to fill the questionnaires and answers the

interview guide were members of the top management

cadre in the case study. This is based on the fact that

 72

these level of management are directly involved in

organization strategies.

3.7 RELIABILITY OF THE INSTRUMENT

The reliability of the instrument was determined by

testing the administering consistering the questionnaire in
two occasions to the same respondents and paring the two
questionnaires completed by each respondent. The
responses were compared and found to be highly
consistent. This showing that the instrument was reliable.

3.8 METHOD OF DATA PRESENTATION AND

ANALYSIS

Data presentation is concerned with converting crude

fragment of responses rate and observation into orderly
statistics that are ready for analysis and interpretation.
The collected data are presented using tabulation (simple
tables) which allowed the researcher to convert the
frequencies (responses rate) into simple percentages and
then used to examine the questionnaires and personal
interview guide. Statistical tool used in testing the
 73

hypothesis is chi-square statistical method which is stated

below.

X2 = n/(OF-EF)2

Cal 2=1ef

Where X2 = statistical test of chi-square

∑ = sigma meaning summation

OF = observed frequency

EF = expected frequency

Decision rule: if the calculated chi-square (X2 cash) is

greater than tabulated chi-square (X2 cal), accept

alternative hypothesis and reject null hypothesis, thereby

make your conclusion. But if the result is otherwise (i.e X2

tab) > (X2 cal) then your decision must be vice versa and

making your conclusion as well.

 74

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 DATA PRESENTATION

Basically primary data were collected from the use of

questionnaire and oral interview for the purpose of data

presentation and analysis. The questionnaires were

distributed among retirees and staff of Enugu state civil

service and the total number of questionnaires distributed

were fort (40) questionnaire in which the whole forty (40)

questionnaires were completely filled and returned

representing 100% thereby making it viable for this study.

The returned questionnaires will be presented in tables

and analyzed for easy interpretation and gives a better

understanding of the subject matter. Retirement policy

and problem of implementation in Nigerian public sector

 75

4.2 DATA ANALYSIS AND INTERPRETATION

The resultant analysis of the data collected from the

administration of questionnaires and oral interview guide

and this analysis and discussion of results will be based on

general questions.

Table 4.1

Functional retirement policy

Options Frequency Percentage

Yes 40 100%

No - -

Not sure - -

Total 40 100%

Source: Field survey 2012

 76

The table above shows that 100% respondents said that

their organization (ESCS) have a functional retirement

policy.

Table

Retirement policy union with pension reform

Options Frequency Percentage

Yes 32 80%

No 6 15%

Not sure 2 5%

Total 40 100%

Source: Field survey 2012

The table above shows that 80% respondents said that the

organization’s retirement policy is in union with the

 77

pension reform act while 15% respondents said that the

organization’s retirement policy is not in union with the

pension reform act and 5% respondents said that they are

not sure if the organization’s retirement policy is in union

with the pension reform act.

Table 4.3

Nature of retirement in organization.

Options Frequency Percentage

Voluntary 8 20%

Compulsory 12 30%

Others 20 50%

Total 40 100%

Source: Field survey 2012

 78

The table above shows that 50% respondents said that the

nature of retirement in the organization is when one is due

for it, while 30% respondents said that the nature of

retirement is compulsory and the remaining 20%

respondents opted for voluntary retirement in the

organization.

Table 4.4

Retirement age in the organization

Options Frequency Percentage

45 – 54 years 4 10%

55 – 64 years 28 70%

65 years and 8 20%

above

Total 40 100%

Source: Field survey 2012

 79

The above result reveals that 70% respondents said that

their retirement age was between 55 and 64 years while

20% respondents said that theirs was 65 years and above

and those of 45 years, 54 years were 10% respondents.

Table 4.5

Difficulty in claiming retirement benefits.

Options Frequency Percentage

Yes 32 80%

No 8 20%

Not sure - -

Total 40 100%

Source: Field survey 2012

 80

The above table reveals that 80% respondents said that

there is difficulty in claiming their gratuity and pension

while 20% respondents said there is no difficulty in

claiming their retirement benefits.

Table 4.6

Enjoying retirement period

Options Frequency Percentage

Yes 8 20%

No 32 80%

Not sure - -

Total 40 100%

Source: Field survey 2012

 81

The result above reveals that 80% respondents said they

have not been enjoying their retirement period due to

challenges after retirement while 20% respondents said

that they have been enjoying their retirement period.

Table 4.7

Having retirement saving account

Options Frequency Percentage

Yes 40 100%

No - -

Not sure - -

Total 40 100%

Source: Field survey 2012

 82

The table above reveals that 65% respondents are in

support with the pension reform act (2004) while 30%

respondents are not in support with the pension reform

act.

Table 4.8

Support for the pension reform at

Options Frequency Percentage

Yes 26 65%

No 12 30%

Not sure 2 5%

Total 40 100%

Source: Field survey 2012

 83

The table above reveals that 65% respondents are in

support with the pension reform act (2004) while 30%

respondents are not in support with the pension reform

act (PRA) 204 and 5% of the respondents said that they

are neutral in their support for the reform act 2004.

Table 4.9

Factors hindering effective implementation pay G

Options Frequency Percentage

Non-compliance - -
by stakeholders

Weak institutional 6 -
capacity

Corruption and - 15%

inflation

Wages crisis 34 85%

Total 40 100%

Source: Field survey 2012

 84

The result above reveals that 85% respondents went for

all of the above problems affecting the effective

implementation of the pay-as-you-go retirement policy

and these factors includes non-compliance by

stakeholders.

Weak institutional capacity, wages crisis and corruption

and inflation while only 15% respondents went for

corruption and inflation as a major factor hindering the

effective implementation of pay-as-you –go defined

benefits scheme giving birth to pension reform act.

 85

Table 4.10

Pension act 2004 meeting the challenges of the previous

policy.

Options Frequency Percentage

Strongly 8 20%

Agrees 24 60%

Disagrees 8 20%

Strongly - -

disagrees

Total 40 100%

Source: Field survey 2012

The table above shows that 60% respondents agrees that

pension reform act (PRA) 2004 is able to meet the

 86

challenges of the previous retirement policy and this was

strongly agrees by 20% respondents while 20%

respondents disagrees to it PRA 2004 would not be able to

meet up with the challenges of the previous retirement

policy.

Table 4.11

Meeting the challenges of life after

Options Frequency Percentage

Yes 32 80%

No 8 20%

Not sure - -

Total 40 100%

Source: Field survey 2012

 87

The table above shows that 80% respondents said that

with the operation of PRA 2004 they (retirees) can meet
the challenges of life after retirement while 20%
respondents said they cannot meet up the challenges of
life after retirement.

Table 4.12

Effective implementation of PRA 2004 avert hardship of

retiree of Enugu state civil service (ESCS)

Options Frequency Percentage

Strongly agree 8 20%

Agree 24 60%

Disagree 8 20%

Strongly disagree - -

Total 40 100%

Source: Field survey 2012

 88

The above table reveals that 60% respondents agrees that

the effective implementation of pension reform act 2004

would avert the hardship of retirees Enugu state civil

service.

Table 4.13

Engagement of other productive venture after retirement

Options Frequency Percentage

Yes 20 50%

No 20 50%

Not sure - -

Total 40 100%

Source: Field survey 2012

 89

The result above reveals that 50% respondents engage in

other productive venture after their retirement while the

other 50% respondents do not.

Table 4.14

Government effort at stabilizing social security for retirees

is well commendable.

Options Frequency Percentage

Strongly agrees 8 20%

Agrees 24 60%

Disagrees 8 20%

Strongly - -
disagrees

Total 40 100

Source: Field survey 2012

 90

The above result reveals that 60% respondents agree that

government efforts at stabilizing social security among

retirees is well commendable and this was supported by

20% respondents who strongly agrees to it while 20%

respondents disagree that government efforts at

stabilizing social security among retirees in Nigeria is not

commendable.

Table 4.15

Resolution for pension reform act 2004 in the current

dispension

Options Frequency Percentage

Provision of social 6 15%

security and
protection

Positive attitudes 10 25%

towards
 91

retirement

Lessen the burden 4 10%

of retirement life

Have it own 4 10%

obnoxious law

Effective 16 40%
management and
practice

Total 40 100%

Source: Field survey 2012

The table above shows that among the resolution made

for the pension reform act (PRA) 2004 in these current

dispensation 40% respondents went for effective

management and practice must be sustained and 25%

respondents went for creating a positive attitude towards

 92

retirement while 15% respondents said that the provision

of social security and protection should be encouraged

and 10% respondents went for Lessing the burden of life

after retirement and another 10% respondents also said

the pension reform act (PRA) 2004 have its own obnoxious

law as experienced in the previous retirement policy.

4.3 TEST OF HYPOTHESIS

Based on data analysis and interpretation the

formulated hypothesis would tested using chi-square (X2)

which is stated below. The hypothesis is stated in null and

alternative hypothesis.

Hypothesis one

Null hypothesis (H0): The effective implementation of

pension reform act would not avert the hardship of

retirees of Enugu state civil service.

 93

Alternative hypothesis (HI): The effective implementation

of pension reform act would avert the hardship of retirees

of Enugu state civil service.

The statistical test is X2 = n∑(OF – EF)2

1= EF

The level of significance used is 5% i.e d = 0.05

The degree of freedom is given by (k – 1) where is the

number of option in the computed data analysis.

Degree of freedom (DF) = K–1

DF = 4–1

DF = 3

Computing the contingency table will be based on table

4.12 of data analysis and interpretation

Table 4.16
 94

Contingency table

Options Observation Expected (OF-EF) (OF-EF) (OF-EF)2

Frequency frequency
EF

Strongly 8 10 -2 4 04
agrees

Agrees 24 10 14 196 19.6

Disagrees 8 10 -2 4 0.4

Strongly 0 10 -10 100 10

disagrees

Total (∑) 40 40 30.4

OF = observed frequency

EF = expected frequency obtained by dividing total

frequency by the number of options.

EF = 40/4 = 10
 95

Statistical test (X204) = ∑ (OF – EF)2

EF

X2cal = 30.4

The critical value (table value) will be gotten from the chi-

square distribution table by determining 3d.f@ 0.05 =

7.815

Therefore comparing the calculated chi-square and the

critical value X2cal = 30.4 > X2 table =

7.815

Decision rule: Since the calculated chi-square (X2cal

=30.4) is greater than the tabulated chi-square (X2table =

7.815) we accept the alternative hypothesis and

reject the null hypothesis we therefore conclude by saying

the effective implementation of pension reform act would

avert the hardship of retirees of Enugu state civil service.

 96

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND

RECOMMENDATIONS

5.1 SUMMARY OF FINDINGS

From the data analysis and interpretation presented

in chapter four the following are its findings.

In Enugu state civil service there is a functional

retirement policy which is in union with the pension reform

act (PRA) 2004.

The nature of retirement in the organization is mostly

completion of services and compulsory retirement while

the age of retirement is mostly between 55 years and 64

years as well as 65 years and above. The retirees

complained that they have experienced difficulty in

claiming their gratuity and pension which have resulted to

 97

not enjoying their retirement periods. The retirees of

Enugu state civil service have a retirement savings

account (RSA) thereby, giving their support for the

pension reform act 2004.

The following were the factors hindering the effective

implementation of the pay-as-you-go (PAYG) defined

benefits (DB) scheme non-compliance by stakeholders.

1. Corruption inflation weak institutional capacity and

wage crisis of which corruption and inflation was

rated highest. As a result of this it was agreed that

with the pension reform act (PRA) 2004 is able to

meet up with the challenges of the previous

retirement policy, so as to enable retirees meet up

the challenges of life after retirement arising from

effective management and practice of PRA 2004.

 98

2. The effective implementation of pension reform act

(PRA) 2004 would avert the hardships of retirees of

Enugu state civil service after their retirement. These

have force some of them to engage in other

productive venture in retirement at least average.

3. The effort of government towards stabilizing social

security for retirees in Nigeria is well commendable

and the following were their under the current

dispensation.

4. Effective management and practice of PRA 2004 must

be sustained.

5. It helps in the provision of social security and

protection during retirement.

6. Having a positive attitude towards retirements.

7. It lessen the burden of life after retirement and also

it have its own obnoxious laws this require caution

 99

and fiscal discipline among operators of the scheme

(PRA 2004).

Also in testing the hypothesis, the chi-square statistical

tool was adopted the result shows that the alternative

hypothesis was accepted and therefore conclude that the

effective implementation of pension reform act would

avert the hardships of retirees of Enugu state civil service

after retirement.

5.2 CONCLUSION

It has been observed that retirees of yesterday are

experiencing difficulty moment especially those who did

not plan for their retirement but the pension reform act

2004 as amended there are a lot of benefits accruing to

pensioners today as a result of contributory scheme,

thereby providing them the opportunity to plan for their

retirement with rising challenges in socio-economic life of

 100

the state and nation government have been fulfilling their

own part of the contributions thereby providing adequate

funds for effective implementation of pension reform act

among the operators of the scheme (PFAS, PFCS and

CPFAS).

It was also observed that if retirement age is

reviewed upward (i.e from 60 to 70) as it is being

speculated by top management board thereby extending

their years of service. This will go along way in affecting

the growth and development of the state civil service

commission.

Consequently, this creates a great fear and anxiety

among probation retirees whose retirement might be

compulsory and unexpected thereby leading to corrupt

practices and embezzlement of funds in order to amass

wealth for life after retirement.

 101

The purpose of the pension reform act 2004 is to

alleviate the suffering of pensioners in the country

because the old system of payment was dubious it was

dubious that pensioners were cheated by their employers

(Okpebholo 2011:91) to quicken the dispensation of the

pensioners benefits in terms of gratuities and pension the

federal government went further to establish the national

pension commission (NPC PENCOM) which later licensed

pension fund administrators (PFAS) and pension fund

custodians (PFCS).

According to the federation of informal workers

organization of Nigeria (FIWON) everyone needs access to

social security children needs financial support from

society to help their families cope with the rising cost of

education and health care. Workers needs protection

against risk of loss of income because of incapacity for

 102

work employers and enterprises needs social security for a

productive workforce pensioners need income security for

a satisfactory and fulfilling retirement society needs. Social

security for stable labour relations social security helps

create a positive attitude towards structural and technical

change as well as to the challenges of globalization and its

potential benefits.

The above suggestion were made in cognizance of

pension reform act (2004) and this requires effective and

efficient implementation through coordination and

management of the operations of PRA 2004. This had

enabled most employees in both public and private sector

to have retirement saving account. Many administrators of

the PRA 2004 must live up to their integrity and perform

their function diligently.

 103

5.3 RECOMMENDATIONS

In the light of the above discussion and study, the

following recommendations were made:

1. The roles and functions of PFAS and PFCS are pivotal

to the success of the defined contributory pension

scheme which believes on them therefore, to play the

game by the rules, ensure probity, sincerity,

unflinching commitment to the success of the

scheme and provision of service with passion to

account holders/pensioners in order to guarantee

availability of retirement benefits as and when due.

2. The provision of enabling environment for effective

implementation of the pension system is the

responsibility of pencom and the federal government.

3. The national pension commission (pencom) should

take full responsibility of pensioners liabilities even

 104

serving as an under taker when the pensioner die

instead of accumulating indebtedness for both the

pensioners and their next of kins.

4. If the government wants more patronage of this

scheme, it has to be obliterate section 4 subsection

1a, b, c and 2 of the act that constitutes odds to the

financial well being of the pensioners. It is this

section particularly that makes some organizations to

object to the admission that the scheme is already a

mess that they government had wanted to avoid all

long. Therefore, the national assembly should rise up

to the occasion with the view to reviewing it.

5. There is an urgent need for presidential intervention

in this matter, president Goodluck Jonathan should

be passionate enough to use his good office to set

aside the obnoxious section of the pension act of

 105

2004 that has now crumbled the helpless pensioners

of this country into object penury.

6. Also there should be full payment of the pensioners

gratuity as to enable them to offset their various

mortgage housing loans and other indebtedness

(Okpebholo 2011:41).

7. Pencom should ensure effective monitory of all

players adequate sanction of erring operators and

good coverage of all stakeholders.

8. The performer indicators for pencom should include

the degree level of compliance by operators and the

percentage coverage of Nigerian workforce by the

scheme.

9. Relevant legal framework should be put in place by

the federal government to ensure political economy

and necessary support for the scheme by subsequent

governments.
 106

10. The macroeconomic effects of the saving culture

the pension system would engender in the country

will go a long way to revolutionize investment into

the real sector, employment generation, poverty

reduction and growth in the economy in general.

11. Consequently all hands should be on deck to

ensure the success and sustainability of the pension

reform act (PRA) 2004.

12. The social pension provides a regular sour of

income to elders and their house holds and is

providing to be a powerful instrument of development

by supporting households economic activity and

raising investment in physical and human capital. The

social pension has let to a significant improvement in

the status of elders within their households

(Kolmolage 2011).
 107

BIBLIOGRAPHY
Ahmad M.K (2006) The contributory pension scheme
institutional and legal frameworks central bank of
Nigeria (CBN) Billion 30(2) April/June pg 1-6
Amid A.O (1975) Preparing for and managing your
retirement Owerri, Owena press Nigeria

Aledo N.A.P (2006) Investments and risk management

under the new pension scheme CBN Billion 30(2)
April/June pg 19-29

Aledo N.A.P (2006) Investments and risk management

under the new pension scheme CBN Billion 30(2)
April/June pg 19-29

Balogun A. (2006) Understanding the new pension reform

act (PRA) 2004, CBN Biillion 30(2), April/June pg 7-
18

Batagarawa M. (2003) Federal government tells

pensioners full truth vanguard July 30 pg 14

Chejina E.C (1995) The law and your pension plans, the
Guardian October 31 pg 16

Holdings E. (1999) Rich Dad’s cash flow Quadrant, USA

Warner Books publisher

Komolage (2011) pensioners need steady income say ]

F/WON, Vanguard July 28 pg 41

Kotler P. (2005) Marketing Management (11th ed.) India

person education Inc
 108

Kotler P. and Kettler K.L (2006) Management (12 ed.)

New Delhi Prentice Hall of India Private Limited.

Kimmel D.C (1987) Retirement choice and retirement

satisfaction New York free press

National pension commission (2004) Pension reform act

Abuja Federal government of Nigeria

Nwosu H.N (1977) Political authority and the Nigerian civil

service Enugu fourth Dimension publisher

Ogbuoshi L.I (2006) Understanding research methods and

thesis writing Enugu Linco enterprises

Olagboye A.A (1998) Joys and Agonies of retirement and

Jobloss Maryland Joja press

Onyeonoru I.P (2010) Social policy and the retirement of

welfare state in Nigeria between the old and new
pension schemes and lessons from the Nordic Model,
Department of Sociology, University of Ibadan
Nigeria

Ozo J.O, Odo P.O, Ani J.O and Ugwu T.U (2007)
Introduction to project writing for business and
financial studies (2nd ed.) Enugu Dimension
publishers

Okpebholo J.E (2011) Pension reform matters arising

Vanguard July 28 pg 41
 109

Smith C.M (1974) Retirement the organization and the

individual, A survey of current attitudes and
Company practice London Reed print Ltd

Typhoon International (2003) The new International

websters Encyclopedia Dictionary of English language
Columbia typoon International

Udeze J.O (2005) Business Research, Methodology Enugu

chi-Ezeugo ventures

Uzo-Igwe N.C (1997) Retirement management without

tears Enugu international press

White E and Whitehead J. (1983) Ministry with the Aging

Sam Fransisco Harper and Row publishers
 110

QUESTIONNAIRE

Department of public
administration and management
Institute of management and
technology (IMT) Enugu state
November, 2012

Dear Respondent ,

I am an HND final student of the above institution carrying

out a research titled retirement policy and Problem Of
Implementation In Nigerian Public Sector (A Case Study Of
Enugu state Civil Service).

Kindly assist me in answering the question here in for the

purpose of this research is purely academic and as such
the information provided will be held in strict confidence.

Thanks and God bless.

Yours faithfully,

Nwobodo Henry

IMT/PAD/H2010/451
 111

QUESTIONS

Instruction: Tick (√) as appropriate in the options

provided and make comment where necessary.

SECTION A-B10-DATA

1. sex

(a) male [ ]

(b) female [ ]

2. age range

(a) 21 – 30 years [ ]

(b) 31 – 40 years [ ]

(c) 41 – 50 years [ ]

3. marital status

(a) single [ ]
 112

(b) married [ ]

(c) divorced [ ]

4. educational qualification

(a) SSCE/NECO/GCE [ ]

(b) ND/NCE [ ]

(c) HND/B.Sc/M.BA [ ]

(d) Professional [ ]

5. position occupation

______________________________________________

SECTION B- GENERAL QUESTIONS

1. does your organization have a functional retirement

policy?

(a) Yes [ ]
 113

(b) No [ ]

(c) Not sure [ ]

2. is this retirement policy in union with the pension

reform act?

(a) Yes [ ]

(b) No [ ]

(c) Not sure [ ]

3. What is the nature of retirement in the organization?

(a) voluntary [ ]

(b) compulsory [ ]

(c) others [ ]

4. What is the age of retirement in the organization?

(a) 45 – 54 years [ ]
 114

(b) 55 – 64 years [ ]

(c) 65 years and above [ ]

5. Is there difficulty in claiming your gratuity and

pension?

(a) Yes [ ]

(b) No [ ]

(c) Not sure [ ]

6. Have you been enjoying your retirement period?

(a) Yes [ ]

(b) No [ ]

(c) Not sure [ ]

7. Do you have a retirement savings account?

(a) Yes [ ]
 115

(b) No [ ]

(c) Not sure [ ]

8. Are you in support with pension reform act?

(a) Yes [ ]

(b) No [ ]

(c) Not sure [ ]

9. What are the factors that hinder the effective

implementation of PAY-AS-YOU-GO (PAYG) scheme?

(a) non-compliance [ ]

(b) weak institutional capacity [ ]

(c) corruption and inflation [ ]

(d) all of the above [ ]

 116

10. Do you agree that pension reform act (PRA) 2004 is

able to meet up the challenges of the previous

retirement policy?

(a) Yes [ ]

(b) No [ ]

(c) Not sure [ ]

11. with the operation of PRA 2004, do you think a

retiree can meet the challenges of life after

retirement?

(a) Yes [ ]

(b) No [ ]

(c) Not sure [ ]

 117

12. Do you agree that the effective implementation of

pension reform act would avert the hardships of

retirees of Enugu state civil service?

(a) Strongly agree [ ]

(b) Agree [ ]

(c) Disagree [ ]

(d) Strongly disagree [ ]

13. Do you engage in other productive venture after your

retirement?

(a) Yes [ ]

(b) No [ ]

(c) Not sure [ ]

14. Do you agree that government efforts at stabilizing

social security for retirees is well commendable?

 118

(a) Strongly agree [ ]

(b) Agree [ ]

(c) Disagree [ ]

(d) Strongly disagree [ ]

15. What are your resolutions for the pension reform act

2004 in the current dispensation?

(a) To provide social security and protection [ ]

(b) To create positive attitude towards retirement

(c) To lessen the burden of life after retirement [

(d) It also have its own obnoxious laws as well []

(e) There should be effective management and

practice [ ]