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Text | Tashi Rum
Editor|Tsinghua Li Bo
introduction
The lack of satisfactory retirement schemes, coupled with poor benefits for retirees, led to the introduction of contributory pension schemes. Pension administration in Nigeria dates back to the 1950s.
However, since June 2004, with the enactment of the Pension Reform Act 2004, new pension schemes have been implemented.
The new bill introduces a new pension scheme in Nigeria, a defined contribution scheme that differs from the old scheme, which was mainly derived benefits.
Although the new plan is expected to be better than the old plan because it is expected to make up for the main shortcomings and deficiencies in the old plan, there are obvious mistakes, so the Pension Reform Act 2014 had to be enacted on July 1, 2014, and there has been agitation for change.
Unfortunately, most retirees or prospective retirees are not aware of the procedures or activities of PENCOM, pension fund administrators and other relevant participants in the industry.
pension
The issue of pensions has recently received global attention, with many policymakers in different countries around the world simplifying privately subsidized retirement income (Odia & Okoye, 2012).
Pensions thus become pension systems, becoming an important multi-pillar programme not only for poverty alleviation, mainly in developing countries, but also for playing an important role in national transformation agendas, "exceeding their investments in national budgets, financial and monetary sectors, productivity and infrastructure (Oladeinde, 2021).
According to the Law Dictionary and the Blake Law Dictionary, 2nd edition, a pension is "a retirement fund that partially compensates an employee for work done in the future and may include a portion of the employee's contribution and an employer's contribution."
A contributory pension, as the name suggests, is a pension arrangement in which employers and employees contribute an employee pension at a percentage of the employee's income upon retirement.
Pensions are also said to include lump sum payments to employees upon their separation (Adebayo & Dada, 2012).
It is a lifeline for pensioners and may be the only safeguard for Nigerian workers when they are laid off in old age, retirement, or before retirement.
In some cases, pensions are entirely between retirees and hopelessly poor. It is also a reward for long-term commendable service (Bruce, 2009).
Five types of pensions
1. Pension: At the statutory retirement age of 60, 65 or 70 or 60 years of age 60 or 65, especially if length of service is not a reason for retirement, the length of service is used to determine the benefits earned.
2. Pension: refers to a person who has served for 35 years but has not reached the legal retirement age of 60.
3. Compensatory pension: Appointment is determined for less than 35 years or before the statutory retirement age of 60. In this case, the employee will retire at a higher level than his current level.
4. Contribution Pension: This is a monthly contribution by the employer and the employee or only the employer to the employee's retirement savings account. That is the current practice in Nigeria.
5. Compassionate allowance: This is a situation where an employee is fired and is not entitled to any form of compensation. Out of compassion, he can get a one-time payment.
Since the payment of pension benefits has been delayed, retirees have unconsciously accepted it as a normal and predictable thing (Ezenwa & Obiagwu, 2020).
Retirees seem to be seen as a threatened bunch, doomed to die from a simple failure of the system.
The experiences of retirees have become alarming, reducing their life expectancy.
Unfortunately, once some workers realize the fact that they will retire in the short term, most will be afraid to resort to unethical behavior to ensure an uncertain future.
This article aims to study different pension reforms in Nigeria – the old pension scheme, which often has irregularities.
For example, the inclusion of the name "ghost pensioner", while the benefits of real pensioners remained unpaid for months or even years, led to the introduction of a new pension scheme in 2004.
The first part is discussed in the context of a reliable source, namely the pension administration in Nigeria. The second part focuses on the legal regime for contributory pensions.
The third part questions the plight of contributory pension schemes versus old pension schemes and retired and retired Nigerian workers. It ends with some concluding thoughts.
Pension Administration in Nigeria
1. Pensions Regulations 1946
Nigeria's pension scheme began in 1951 when British colonial rulers enacted the Pension Regulations of 1946, so the Regulations have retrospective effect from 1946. But it only applies to British officials accredited to Nigeria.
The Pensions Regulations of 1946 contain important information about public sector pension schemes and are used to determine local administrative employers/employees, the nature of benefits (pensions and gratuities), and the conditions of entitlement (Uzoma, 1989).
2. National Provident Fund (NPF) Scheme 1961
The National Provident Fund (NPF) scheme was established in 1961 as the first statute in Nigeria to address the issue of pensions in the private sector (Odia and Okoye, 2012).
It is Nigeria's first social protection scheme for non-pensionable private sector employees; Primarily a mandatory savings plan where employees and employers contribute the sum of N4.00 per month.
The program only pays its members a lump sum cash when their employment is terminated due to old age or incapacity (Ebere, 2016).
Thus, the National Provident Fund (NPF) scheme was established during the presidential term as a parastatal body of the Nigerian Pensions Board (NPB) (Odia & Okoye 2012).
However, in its operation, the National Provident Fund has underperformed in many aspects.
For example:
1. Workers are neither aware nor aware of the pension system, nor of the rights to which they are entitled;
2. The contribution to the pension is borne only by the employer, so the liability is only with the employer;
3. The expected beneficiaries (retirees) do not have access to the administration of the pension system;
4. There are allegations of substantial misappropriation of pension funds.
3. Pension Reform Act 2004
Obasanjo's government introduced a pension reform aimed at addressing and eliminating problems associated with the old pension scheme (Federal Ministry of Information and Communication, 2004).
Prior to the passage of the bill by the National Assembly, the Nigerian government had a defined benefit scheme that was unfunded and the payment of retirement benefits was budgeted annually.
The Act repealed the Pensions Act 1979 (Federal Law 345 of Nigeria, 1990) and automatically amended the Nigerian Social Insurance Trust Fund Act 1993, which previously regulated retirement benefits in both the public and private sectors.
The 2004 Act establishes uniform regulations and standards for pension administration and retirement benefits in the private sector (SS.34 and 40) and the public sector, and most importantly, it introduces contributory pensions, in which employers and employees each contribute 7.5% to the employee's remuneration, which goes to the employee's pension.
Only those who retire in three years or less are exempt from the Act.
The Act establishes the National Pensions Commission (PENCOM) as the regulator of pensions in Nigeria (Section 14). The main objective of the committee is to "regulate, supervise and ensure the effective management of pension services in Nigeria." ”
The Pension Act and the Retirees' Dilemma
Retirement usually refers to withdrawal and retreat. However, today's retirees and potential retirees face retirement without adequate psychological/emotional and financial preparation.
Organized countries of the world attach great importance to the payment of pensions to retirees. Every government responsible to its citizens knows the importance of pensioners because it appreciates their contribution to the development of the country.
In the UK, for example, pensions are often part of a party's election manifesto (Uma, 2015).
Conversely, in Nigeria, retirement is characterized by unfounded fears that can lead to negative biases such as complacency, falsified records, and mass corruption (Iheama, 2017).
Retirement in Nigeria is also accompanied by self-isolation and poverty; As a result, retirees look for work or do manual work to make ends meet even at a very old age.
This only confirms that pensioners receive insufficient amounts to sustain retirees and their families.
The Workers' Fund lacks an insurance policy
Sections 85-91 of the Pension Reform Act 2014 regulate pension fund managers' investments in pension funds, however, the law does not require pension managers to insure workers' funds.
This adds to the fear of some contributors in the new system, who fear for the safety of their contributions.
This concern was also exacerbated by the Senate committee's finding that "idle cash worth N273.9 billion in seven major pension offices" (Jaiyesinmi, 2012).
Affected military, parastatal, police and university offices. The report also accuses commercial banks of conspiring to loot pension funds.
In the event of a crash or other financial difficulties that could befall pension fund administrators, it will inevitably be detrimental to retirees.
This is another threat to contributory pension schemes. There is also widespread concern about inflation, fees and other consumption that may occur over the years in the process of managing and investing in pension funds; Coupled with the depreciation of the naira, which could affect the value of the donation, it could make the whole policy look like a joke.
Delay in the payment of pensions
Nigerian media have covered too much of the decline in the number of pensioners in several parts of the country; Some die in line to receive pensions that they hold monthly ceremonies (Egbosiuba, 2012).
Iweka (2018) argues that the situation is the same for civilians, military and paramilitaries.
Some of these pensioners, who suffered abuse and unfavorable working conditions during their service, now have to endure months of waiting for their paltry lump sum payment of 50% of their savings.
Currently, despite all the lofty assurances made by the government, employees who have retired since January 2021 have not received any form of payment.
verification has been delayed due to the COVID 10 pandemic; It only ended on December 31, 2021, and in the past three months of 2022, many people have retired.
However, people who have retired since January 2021 have not received any form of payment.
Employers do not send money to employees' retirement savings accounts
One obvious challenge with contributory pension schemes is that some employers do not send remittances. This behavior is a crime, a fact that some employees only discover when they finally receive RSA account statements after verifying and registering for their pension.
They become confused, do not know who to blame, where to run, and can write to their employers and PENCOM for years, and most of the time, they are content with whatever is available.
Rule 11(5) of the 2019 Revised Guidance for Retirement Savings Account Registration requires employers to open temporary RSAs to deposit pension remittances from employees who fail to do so, and there is currently no known sanction for such default, and there is a lack of reported cases of such employers being sanctioned by courts or PENCOM.
Equally shocking is the fact that many workers retire to find that despite monthly deductions for their wages, no money is remitted to their pension fund administrators.
Not registered with the pension fund administrator
Incredibly, many workers die on active duty without registering with any pension fund administrator.
Notwithstanding the proviso attached to section 11(5) of the Pension Reform Act 2014, employers requiring pension fund managers to open RSPs for employees who have been employed for 6 months but have not opened a RSP is not noticeable, nor are there sanctions against such defaulting employers.
Most employees will just rush to open one at the exit point and start looking for where their debit contributions were being funnetodied.
In the worst-case scenario, when a staff member dies, the designated next of kin will only find that the deceased did not open a letter of introduction to the pension fund administrator as required.
This becomes pathetic considering that the window opened earlier by the regulatory authority (PENCOM) for such death benefit applications (DBAs) was closed for obvious reasons.
However, beneficiaries can write to PENCOM's Benefit Application Unit (BAU) with supporting documentation and request funding.
summary
This article reviews in detail the different pension bills that have been passed in Nigeria. It examines the commitments to contributory pension schemes in 2004 and the challenges that led to the amendment and passage of the 2014 Act.
It highlighted the program's coverage and the lack of mechanisms to enforce compliance.
It cites the plight of retirees, most of whom are ignorant of their investments until sometimes too late, and having a laudable pension law does exempt the government and its agencies from certain social responsibilities, such as educating its employees about pension laws.
To ensure that Nigerian workers fully benefit from the scheme, stakeholders and the government must provide more inspiration through workshops and seminars to help alleviate concerns about retirement.
bibliography
1.Abada, IM、Ifeoma, ON 和 Omeh, PH (2018)
2.Adebayo, A.I., & Dada, R. (2012)
3.Anazodo, RO、Ezenwile, U.、Chidolue, DN 和 Umetiti, C. (2014)
4. Bruce, AAA (2009)
5.Ebere, CS (2016)。