PROBLEM AND PROSPECT OF PAYMENT OF RETIREMENT BENEFITS IN NIGERIAN CIVIL SERVICE ( A STUDY OF ANAMBRA STATE CIVIL SERVICE COMMISSION)

TABLE OF CONTENT

Title page

Approval page

Dedication

Acknowledgment

Abstract

Table of content

CHAPTER ONE

INTRODUCTION

1.1        Background of the study

1.2        Statement of problem

1.3        Objective of the study

1.4        Research question

1.5       Significance of the study

1.6      Research Hypotheses

 

1.7        Scope of the study

1.8      Limitation of the study

1.9      Theoretical framework

1.10      Operational Definition of terms

Reference

CHAPTER TWO

LITERATURE REVIEW

2.1   theoretical review

2.2   Conceptual review

2.3   empirical review

Reference

CHAPETR THREE

RESEARCH METHODOLOGY

3.1 Research design

3.2 Area of the study

3.3        Population of the study

3.4        Sampling and sampling distribution

3.5         Instrument of data collection

3.6        Sources of data collection

3.7        Validation of research instrument

3.8        Test of reliability of instrument

3.9        Method of Data analysis

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS AND INTERPRETATION

4.1    Introductions

4.2    Data analysis

CHAPTER FIVE

5.1    Introduction

5.2    Summary

5.3    Conclusion

5.4    Recommendation

Bibliography

Appendix

 

 

 

 

 

 

 

 

 

 

 

 

 

Abstract

This research work examined the problems and prospects of payment of retirement benefit in Nigeria civil service. The research seeks to identify the efficacy of the board in managing retirement benefits of retirees. It further furnished the strategies to overhaul the board toward meeting the retirees demand and expectation. A simple random sample was adopted in selecting 200 respondents from the pension board and responses obtained through administration of questionnaires. The data was analyzed using tables and percentages and it revealed that the strategies needed to tackle retirees’ problems are by adequately providing technologically advanced instruments and approaches as well as provision for investment in research and development. The study further revealed the problematic state of the management of retirement benefit in Anambra state civil service commission, the existence of bottleneck with regard to poor policy, inefficiency as well as corruptions are responsible for delay in payment of retirement benefits and inefficient system which has adverse effects on the commission in discharging its duties.

 

                                        CHAPTER ONE

                                        INTRODUCTION

1.1 Background of the study

Retirement is a phase of life that every employee must reach whether prepared for or not. It is the point in time when an employee chooses to leave his or her employment permanently (which could be voluntary or involuntary), and generally coincides with the employee’s eligibility to collect retirement resources ranging from social security to company pensions, etc. It is an inevitable stage in someone’s life be it in the private or public service, it is a period in time whereby one’s effort in an organization and role as a paid worker ceases, (Agoro, 2009; Ahmed, 2007; Bassey & Asinya, 2008). This can be as a result of ill health, age or statutorily completing the number of years. With the reform of the civil service decree No. 43 of 1988, retirement age has been put at 60 years or 35 years in service. Whichever comes first, there arises the need to carefully and adequately manage these categories of workers who had given most of their life, time and efforts to the actualisation of organizational growth and its development. Thus, it presents a worse situation when the retiree is not adequately prepared to face this ultimate phase of life. This among others have necessitated the need for a pension administration in order to cater for future responsibilities of these categories of workers and to enable them have a similar and reasonable standard of living prior to what obtains while they were in active service. In most developing countries with Nigeria particularly, government restrict working age of public civil servants to prevent an ageing labour force and allowing entrants of young able-bodied labour for increasing efficiency and productivity, (Federal Republic of Nigeria Official Gazette, 2004). This is important because as an employee becomes older, his Marginal Physical Productivity of Labour (MPPL) will decline, thus retaining such an employee in the service of the organization will lead to running an organization at a loss. Hence, why the statutory working age in the public service is fixed at sixty (60) years or thirty-five (35) years of unbroken active working service before retirement, but the Retirement Age Harmonization Act of 2012 stamps the retirement age of judicial officers and academic staff of tertiary institutions at 70 and 65years respectively because of the belief that “the older, the wiser” (Maji, 2014). During retirement, a retiree public officerusually receives certain benefits in the form of gratuity and pension. Gratuity is the sum total lump paid to a worker on existing from the service either through withdrawal or retirement, while pension is the sum of annuity paid periodically, usually monthly to a public servant who disengages from service after attaining a specified age limit usually 60 years or 35 years of active service, (Ezeani, 2001; Ebosele, 2001). In other words, gratuity and pension are post-employment benefits. These benefits are designed to prevent a sudden sharp drop in the financial capacity and living standard of the worker as would happen with the stoppage of his monthly salary and allowances after disengagement. The lump sum or gratuity he is paid is meant to enable the retiree finance any post-retirement endeavour of his choice while the pension replaces the monthly salary the retiree gets while he was still in active serve, (Babasola, 2000). Prior to the enactment of the pension Reform Act 2004, Pension schemes in Nigeria had been bedeviled by many problems. The public service operated an unfounded benefits scheme and the payment of retirement benefits were budgeted annually. According to Mariam (2013), the annual budgetary allocation for pension was often one of the most vulnerable items in budget implementation in the light of resources constraints. In many cases, even where budgetary provisions were made inadequate and untimely release of funds resulted in delays and accumulation of arrears of payment of pension right. It was obvious therefore that the defined benefits scheme could not be sustained. In the private sector on the other hand, many employees were not covered by the pension schemes put in place by their employers and many of these scheme were not founded. Beside, where the schemes were founded, the management of pension fund was full malpractice between the fund managers and the trustees of the pension funds. An individual employee that has dedicated to his service for a reasonable period of time will surely, get tired. The only solution for the tired person is for him to have rest. By extension, there is no way one can have rest no matter the degree of his tiredness if the daily bread for resting period is not properly, sufficiently and adequately provided. According to Chandan (2007), retirement is a word that is definitely at the back of every employee’s mind. He is always certain that the present job will be left naturally or otherwise and life must continue even after retirement. Should you ask him, how will you cope with life after retirement? The certain answer will be, I will use my retirement benefits. Generally speaking civil servants especially in Nigeria do not have concrete hope about their state of life after retirement. This is due to the fact that Nigeria pension/gratuity scheme is full of lapses or shortcomings. The negative impact is largely detrimental to the life of retirees. Perhaps it is only obtainable in Adamawa state Nigeria, that civil servants receive their retirements without a prior notice and no immediate provision for retirees’ welfare after retirement. Another great concern in this phenomenon is extensive prolonged protocols involved in the course of processing the retirement benefits. It usually takes a year or more years before the funds are being released. In this way, the retiree having spent a substantial part of his productive life working to earn a living, can in his old age (that is, at retirement) sustain and maintain a standard of living comparable to what he was used to while in active service. It is based on this that most progressive government enact laws to back up their policies on employment, retirement and pension in both the public and private sectors of the economy. To Casey (2011) and Taiwo (2014), pensions as a form of social security against old-age poverty and other uncertainties have attracted great interest virtually everywhere in the world, both in developed, developing and under-developed countries. Pension programmes, especially those that are publicly financed and administered, have become an issue of concern to economists, policymakers and the general public. This is not only because such programmes are central to the well-being of pensioners and the elderly, but also because the majority of pension programmes are not actuarially balanced (that is they are not financially stable) and as such, they are run at deficits, thus making the present values of their future liabilities to be enormous. In some countries, especially those that are economically advanced, pensions are usually extended to other categories of people apart from retirees, such as widows, orphans, disabled people (in the form of disability pensions), and the elderly or the aged.

1.2 STATEMENT OF THE PROBLEM

The management of retirement benefits by Anambra state civil service commission, was inundated by multiple problems which affected the efficiency of the system, considering the swelling population of retirees. One of the problems is lack of efficient system for the payment of benefits of retirees. An effective data for beneficiary’s arrears has not been forthcoming since the establishment of the commission. The computerization and use of adequate software packages for the system would have ensured the efficiency of the payment channel. Most data are contained in hard copies which are exposed to damages, insecurity and privacy issues. The pension board is characterized by poor management of resources. Cash inflows in favour of the retirees were always misappropriated because of the corrupt system and this led to the board’s drain of resources needed to settle outstanding benefits owed several years. Moreover, as the population of retiree grows, the resource needed to pay such population has become a problem to the board and government. The government is preoccupied with other demands which made resources scarce for the payment of retired civil servants benefits. On the other hand, even with a good system of management of retirement benefits in Anambra State civil service commission on ground, bedevilment of this generation such as corruption, tribalism and undue favouritism do comes in. In essence, all the above mentioned problems to a great extent influence the problems and prospects in the management of retirement benefits in Anambra state civil service commission.

1.3 OBJECTIVE OF THE STUDY

The main objective of this study is to examine the problem and prospect of payment of retirement benefits in Nigeria civil service, with emphasis on Anambra state civil service commission, but to aid the completion of the study, the researcher intend to achieve the following specific objectives;

1. i) To identify the effectiveness of the commission in the payment of retirement benefits.
2. ii) To examine the problems faced by the commission in payment retirement benefit.

iii) To examine the role of government in ensuring effective management and payment of retirement benefit in Anambra state

1. iv) To examine the role of the commission in payment of retirement benefit in Nigeria civil service

1.4 RESEARCH QUESTION

The following research questions were formulated by the researcher to aid the completion of the study;

1. i) Are they problems faced by the commission in payment retirement benefit?
2. ii) How effective is the commission in the payment of retirement benefits in Anambra state?

iii) Does the government play any role in ensuring effective management and payment of retirement benefit in Anambra state?

1. iv) Does Anambra state civil service commission play any role in payment of retirement benefit in Nigeria civil service?

1.5 SIGNIFICANCE OF THE STUDY

It is believed that at the completion of the study, the findings will be of great benefit to the Anambra state civil service commission as the study seek to examine the challenge of non-payment of retirement benefit and proffer suggested solution to ameliorate this problem, the study will also be of importance to the federal pension board as the study will aid in policy formulation of the commission to better their performance, the study will also be of importance to researchers as the study will serve as a reference point to further study. Finally, the study will be of significance to academia’s, students, teachers and the general public as the study will contribute to the pool of existing literature on the subject matter.

1.6 RESEARCH HYPOTHESES

The following research hypotheses were formulate by the researcher to aid the completion of the study’

H₀: Government does not play any role in ensuring effective management and payment of retirement benefit in Anambra state

H₁: Government does play a role in ensuring effective management and payment of retirement benefit in Anambra state

H₀: The commission does not face any significant problem in payment retirement benefit

H₂: The commission does face a significant problem in payment retirement benefit

1.7 SCOPE OF THE STUDY

The scope of the study covers problems and prospect of payment of retirement benefit in Nigeria civil service, with emphasis on Anambra state civil service commission. The study examine the challenges encountered in the payment of retirement benefit by the appropriate authority and the possible remedies to this constrain

1.8 LIMITATION OF THE STUDY

In the cause of the study, there are some factors that limited the scope of the study;

Insufficient Fund: The researcher needed a lot of money for transportation to collect the necessary data for the study. Money was also required to visit secondary data sources such as the internet, libraries, professional bodies, and so on.

Lack of Co-Operation:  The unco-operative attitudes of many government officials were not encouraging.

Some of them were so biased and prejudiced that did not care to understand the purpose of the research. This resulted to their failure to provide sufficient information required for proper completion of the study.

Time Pressure:    Time allowed was not enough for through completion of this research, in consideration of the fact that i was also facing other academic studies during the semester.

1.9 THEORETICAL FRAMEWORK

The frameworks of analysis adopted for this study are Productivity Theories of Pension propounded by (Dorsey, Cornwell and Macpherson, 1998) and Ecological Theory anchored on The Theory of Prismatic Society, by Fred W. Riggs in (Onah, 2008; Ezeani, 2005; Okoli, 2004; Kasfir, 1969). (i) Productivity theories of pension are of two sides: The demand and supply sides. Both sides of the theory however, agreed that pension schemes are established as incentives and motivation to encourage workers to increase their productivity or performance. The demand side of the theory posits that employers make payments to employees’ pension funds because workers are keen or prefer pension savings to cash payments to their emoluments. This is because of the benefits attached. These include reduction in income tax of the employee, the retirement benefits, such as social security from the employer’s contributions, interest earnings and dividend earnings on pension fund investment or assets that are not taxed. Others include the prospect of future enhanced and acceptable pension benefits, from awards or (increases as may be offered by the government from time to time. Yet another benefit is an insurance cover of sorts against risks that pension provides. The demand side also states that employees, especially the high income earners, prefer pension to cash payments because of a possible annuity (fixed amount of money paid at regular intervals) for as long as the pensioner lives. There is the shifting of risk of poor asset or investment performance to the employer in Defined Benefit Pension Scheme (DBPS), which is not exactly so in the CPS where there is a PFA. In the CPS, it is the asset earnings that are distributed to contributors or pensioners. Thus, risk shifting is easier to operate in a DBPS where there is a promised or defined benefit than in CPS where the value of the benefit is a function of the value of the asset or pension fund performance. Finally, on the demand side, there is the potential of improved performance or output of the employee merely by the institution of a pension fund or scheme. The implication of this is that the pension scheme must be well articulated; involve the workers in the decision processes, well funded and sustainable, such that it can motivate the workers or employees. The supply side of this theory posits that employees’ gain from pension tends to raise the level of workforce productivity and reduce labour costs. This is because the employers’ investments in the training of the workforce, improved condition of service, provision of adequate resources etc, are greatly offset by the workforce’s improved output or productivity. There is also the perspective that the supply side to the theory serves as an incentive for personnel to remain in the organization for a long time. It recognizes that pension coverage is endogenous and can test the importance of productivity factors against demand-side theories of why firms sponsor pensions. It simultaneously estimates the channels through which pension incentives raise productivity, as suggested by long-term employment models: e.g., by encouraging employee training. It links improved labor force outcomes to productivity gains. In other words, employers offer pension benefits to attract, retain for high productivity and reward employees. While employees, on the other hand, rely on retirement benefits (pensions) as a form of financial security in their less productive years.

 

 

 

 

 

 

 

 

 

 

 

 

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