Management Of Pension Schemes in Enugu Public Service (A Case Study Of The Department Of Pension/Establishment Enugu North)
A research project of this nature cannot be complete without reference to some existing relevant workers.
The review will be tone inter the following headings:-
- The principles of pension scheme management.
- The new public services pension scheme practice in Nigeria public parastatals
iii. The need for pension scheme management.
- The problems and prospect in Nigeria pension scheme management.
- who are supposed to receive this pension scheme management?
There exist a common scale of benefits as regard to the pension scheme of public parastatals as well as their counter parts in the civil service and they are expected to from the limited placed on contribution to the scheme that are tax exempt, which is set by joint tax board. All these notwithstanding, the feature of any other scheme, possessing the same attendant benefit and drawback, as any other self-administered scheme. Consideration also has to be given to the spiral scales of benefits they are intended to give and also the strong presence of the government interference
2.1 The principle of pension scheme management
According to pension ordinances (1997) Decree No. 102. Alcen. E.et al (2000) with the condition of services of the civil services detailed the scales of retirement pensions, gratuities and death in services benefits, of civil services. Financed while by the statement of current revenue the scheme had the following principles. Account to the paper by the service on the management of pension schemes in Enugu public services the compulsory retirement age was fixed as 55 years for both male and female officers.
Secondly, Pensioners are over looked, that is why they are not begin paid regularly. the employee who had completed 10years of service and attained the age of 45, on leaving the service is qualified for pension at the rate of 30% or his final salary for each year’s service subject to a maximum pension of two-third of the highest pensionable salary he/she ever received during his employment.
Thirdly, pensioners are not receiving their pension as at when due, due to inadequate funds.
Fourthly, an officer who had not qualified for pension at the time of leaving the service is subjected to some conditions; the officer is entitled to a lump sum of gratuity calculated on his final salary according to the number of years of service.
Fifth, when death occurs, in the course of employment, a graduated benefits rising to a maximum of twice salary will be paid.
Finally, where an officer died as a result of injuries sustained in the year of employment and without his own fault, the buried will pension together with children allowance.
According to public corporation establishment by the state, pension arrangement were set up through trusts and were funded wholly by the employer on a level of contribution basis.
This information under the universities on a system of endowment insurance was contributory.
The source of this information under private sector that only the large multinational companies that have formal pension scheme and the benefits were all case in tenor compared with public service companies. These benefit contract with the broader coverage of social security benefit for all members of the society against the risk that arise from unemployment, sickness, disability, maternity, old age and death for which Nigeria is as yet out.
2.2 The new public service pension scheme practice in nigeria public parastatals
Following the pension scheme practice in Nigeria parastatals after 1989 with effect from 1st April 1984, the retirement benefit of civil servant including the staff of public corporations, universities and local government were substantlly reviewed although there was subsequent modification formalized in the pension act of 1989 as amended in 1990.
The pension decree of 1989 (decree number 102) provided that an officer who died in active service shall have gratuity. He is entitled to all the date of death, paid off if a decreased leaves a widow a maximum of 1/6 of his final salary till her death or till she arrives.
If the decreased officer has more than one wife, this amount will be shared among them. Not exceeding 1/9 of his final salary will be entitlement of each child who has attained the age of eighteen years or if the female children get married before the age of eighteen the children only are entitled to 2/3 of the officer’s final salary in a situation where the widow die’s before children reaches the age of eighteen their entitlement will increased to ½ of the officers finial salary.
The limit of the number of children is six, where the decreased officer is not entitled to a pension, his dependants shall be entitled to a prorate pension calculated at the rate of 2%of pensionable service.
The decree also provides that, where temporary or contract appointment becomes permanent, the period of the unestablished employment counts as part of the service if the appointment is made permanent, according to scholarly Paul Fleming July 2011, whether permanent or non permanent, the period during which an officers is below fifteen years will not be counted. Also during the period when he is on leave without pay except when a scholarship from the government shall be excluded. Also contained is a provision for the preservation of pension right when officer in pensionable service transferred from one public service to another. The benefit is apportioned according to the duration of his service.
Paul Kenny, who is the first pension scheme management head, is of the opinion that when an officer is transferred to public service in circumstance that officer may be entitled to retirement to a pension based on his finial pay or agreement may be reached between both employers for the payment of a lump sum which will be treated as transfer value of the officer in respect of whom the amount was paid. Officer wishing to retire after putting in fifteen years of services shall give three months notice or pay three months of salary in live of such notice. Officer that has put ten but less than fifteen years shall give a month salary in live of notice.
The decree also fixed the minimum pension payable at #360per annual. It must not be less than that administration of public service pension is still till this date governed by this decree.
2.3 Need for management of pension scheme.
According to Diego (1989) management of pension scheme cannot be over emphasizing because of its usefulness. It is needed to work out where necessary the amount that is supposed for different categories of pensioners to receive the pension .it is needed to work out any interment that the federal government might announce, according to pensioners throughout the federation. The management also helps to find out how many people that have been retired in one year and how it affects unmistries parastatals department and other organs of government. Diego Valero: prepares the vouches and passes to the government for approval and payment.
Pensioner’s scheme is important in the sense that it made provision for service, especially the self administered scheme where the employer can make contribution to scheme at the scheme rate he found most convenient. Ernstone (1990) predicted pension plan administration and asset management costs by plan size and type. Pension scheme is of great benefit to the civil servant for instance, in the case where a worker dies in the course of employment and leaving his children’s to the poor widow who is only a pretty trader, through the pension ordinance, the widow is entitled to pension of a maximum of 1/6 of the finial salary of the husband together with the children’s allowance. One could also see that the insured scheme provides more interest when compared with the prevailing interest rates in the money market .this is a result of the part that insurance companies operates a kind of pool. Where an officer dies in the services after the completion of the minimum period of qualifying services. His entitlement shall be paid of his legal personal representation or to any person designated by him during his life time as his next of kin will claim the person. If anybody comes forward within that period, than the next of kin will claim the pension.
Pensioners are not happy with this situation; they feel that the payment system should be completely over handled.
2.4 The problems and prospects in management of pension scheme in nigeria.
According to R.C. Escone (1989) the problem associated with pension scheme are numerous. The explosion of economic activity which has given risen to explosion of pension and creation of new scheme both in government and private sector or government owned parastatals. The pension management organization very thinly in circumstance which cannot be readily supplemented. The problem that effect pension scheme: According to EZE Stone et, is lack of funds to meet its project. This is a very big problem particularly in the department of pension establishment Enugu North in Enugu state.
This is the reason why pensions are being owned for seven months even in some other states, they are being own one year pension salary. Most of the pensioners are suffering because of this problem. Others are to identify truly when pensioners are born to help work his/her retirement benefit. The Geo-political factor in management appointment which trends to over burden the good one due to lack of skills by the other who are seeking for pension, also contained is a provision for an officer in pensionable service is transferred from one public service to another .the pension benefits are apportioned according to the duration or his period in service. The prospects are brighter now than ever before when falsehood was order of the day. Today, Nigeria is among the international countries with a corresponding pension scheme management.
2.5 Who are supposed to receive this pension scheme management?
The people who supposed to receive this pension scheme are those who have worked for a reached specified period of years in service like, thirty five years and sixty five years respectively. They are the people who have given their service to the government.
Beneficiaries of the pension scheme according to okoroji .s. (1987) are as follows: Any officer or worker who has completed his service in the public parastatal. Again, a retired worker who has completed 20 years in service and attained the age of injuries as a result of employment and without his own fault causing him to be disabled is also entitled to pension. They receive the pension till they are called pensioners or senior citizens. Workers would wide usually consider the future prospects in an organization before accepting job offers. Having served for specified number of years staff looks forward to receiving benefits depends on the nation.
In Nigeria two board groups exist, the public service and the organized private organization. The public has statutory retirement benefits; most private organization has no provision for such benefits. According to the history of pension In Nigeria 1951, pension benefits were introduced into public sector, taking effect from 1946, it brought about a major attraction from employment in the public service .the pension act 102 of 1979 was the main legislation guiding the entire public service. To qualify for pension, later, in 1992 it was formed to minimum of 10years for pension and 5years for gratuity.
Furthermore, Adesuntoye (2000) parastatels in a inaugurated board of trustee for the management of their scheme. Their responsibilities were to decide whether to opt for self administered or insured scheme. One notable fact during this period is that pension was more successful in private sector most scheme were insured scheme defined by contributions of employees and employers. It provided large sum of retirement benefits or earlier with draw pension fund managers, portfolio managers, bankers were relevant in pension fund management in the private sector. Under Nigeria social insurance trust fund (NSITF) established decree 77 of 1993, to replace the old national pension fund managed by the federal government for private sector under this scheme, there were poor administration inadequate delivery system and lack of adequate records of movement from one employment to the other, the enactment of the new pension Act 2004 signed into by president Olusegun Obasanjo of pension fund (Dike, 2006) Guilty the new pension regime is the establishment of pension fund administers custodians (PFAS and PFCS).
This pension scheme regulate by the pension commission also private sector driven with government only playing pants by contributing it quota to the relevant pension management for public servant pension provisions of the pension Act of 2004 all government agencies and private organization staff must ensure that all its employee’s have pensions. The penalty for non- compliance include a 2% per month charge of low remitted amount as long as the fault persists. The pension funds must be managed by a national pension funds administrator (PFAS) licensed by the national pension commission and fund must be deposited with a pension fund custodian (PFC) licensed by then national pension commission contributed by employee’s 7.5% their monthly employment comprising basic salary, housing and transport allowance to be matched by employer’s contribution of 7.5% every month this brings it to a total of 15% every month. In case of military personnel, the contribution per employee is 2.5% while the employer contribution is 12.5% At the period of retirement, it is important that the future life of the worker be considered by planning for his welfare this means to pay a consideration that will help the worker to go on need for such compensation prominent among the reasons is to provide economic security for employees at retirement.
According to Osuagwu (2002:12) have observed that bureaucratic bottlenecks are hindrances to management of pension scheme. He however contended that dwindling resources is not short 7 the reasons for such problem. This research will investigate the government and the pension management to ascertain the origin of the problems.
According to structure of pencom: The board of directors is under the chairmanship of chief Oluwole Alan: Adeosun, OON. The executive members of the Board include Mr. M.K Ahmad (Director General/CEO) Mr. Pius Akubueze (commissioner Finance and Investment. In accordance with the powers vested on it by the pension reform Act 2004, the commission has evaluated several applications for licenses to operate as either pension fund Administrators (PFAS) so far, twelve (12) PFA licenses, four (4) for PFC license and one (1) for closed PFA license have been issue this has allowed employees to start opening RSA with the PFAS of their choice
2.6 Summary of literature review.
According to (posy 72:12) pension is one where the amount paid to somebody is set using account to number of the years stayed.
In addition samman (1990)is of the opinion that the scheme for providing immediate relief to the families of government servants who die while in service. Retirement is defined as the change in job situation where by the individual gives up his job when diminishing return set in according to Donnelly (1992:326).
Furthermore, the study showed some of the challenges and prospect facing pension management scheme in Enugu State which include problems the pensioners encounter in collecting their pensions, one of the prospects for management of pension scheme in Enugu public service is to provide the employee with a means of security on retirement, a standard of living reasonably consistent with that enjoyed when at work.
Finally, on the teeth in the course employment a graduated benefit rising to a maximum of two months’ salary will be paid.
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