Problems and Prospects of Pension Administration in Nigerian Public Sector


The importance or role of effective administration of gratuity and pensions as argued and discussed by various authors and scholars both within and outside the country cannot but provide to both the academicians and practicing administrators with the conceptual and analytical point of interest.

“According to a book titled: of (1978) p. 42, gratuity and pension procedure must be maximize so as to reduce expenses on its administration”.

Information gathered from counseling/seminars vital but it is only a bargaining step in the financial planning process. Each employee needs to set retirement goals based on his/her own values and determine how much income will be needed to permit the desired life style. Graps between projected income and expenses can only be analyzed by the employee with a view towards measuring his other income through work or other methods of adjusting life style expenditure.


Retirement planning enhances personal control, like any major transition, retirement can be negative crisis for some, a growth producing for others.

According to Dale Beack (1975) p. 663 in his Book, contended that “gratuity and pension are income benefits accrued to those who have worked in an organization for number of years”.

W.I. Frenc (1978). 268 and 293 also viewed pension in relation to separation benefits employed by a retiree after separation from his/her employment and payroll.

Retirement can be negative crisis for some, a growth producing rewards for others. A sensible person does not really retire, he/she changes activities or occupations. On who retires to do something else, to live in a positive new way is still in command. One who has been retired is a victim, as Downs and Roll (1981) p. 2 commented.

Equally, Parker (1976) was specific to desirable pension scheme as either disengagement or separation of benefits from the service paid periodically.

Although he used pension and gratuity interchangeably, Parker here did not separate pension and gratuity but used them collectively and a pensioner may be entitled to gratuity and may not be entitled to pension.

On retirement, very many have no choice but to exhaust their active gratuity in amortizing their house loan and other payments. The next news one hears of such retired employee one or two years after retirement is that they are dead – little wonder.

According to Ogbomide and Dacks (1980) they referred to “gratuity and pension as non-taxable benefits”. This theory needs criticizing in that taxes serve as one of the governments, source or revenue very vital to government expenditure.

The above authors were able to distinguish between gratuity and pension in a more elaborate manner, hence an accepted concept of gratuity and pension.


Retirement benefits i.e. gratuity and pension are paid to officer who retires from public service in accordance with the provision of government desires and established circulars.

An individual who does not presently work for pay and received retirement benefits from pension programme or scheme is said to be retrieved if one is not working full time and derived at least the largest of his/her financial support from public/private pension payment. It is equally designed the period in life when one’s role as a paid worker ceases.

Retirement originated from industrialized wage-earning and occupation either as a voluntary act or as a society to care for people who are unable to work, but it has become mandatory in many occupations.

Mandatory retirement policies stem more from an insufficient number of jobs than from the general incapacity of older people to perform their occupations. It can be reviewed from three perspectives. As a life event, as a process or as the adoption of a new role. As an event, retirement is monetary and usually not celebrated in the way that we celebrate “not worthily milestone” such as birthdays, marriage etc.

When taken from the process perspective, retirement begins with the first knowledge that one’s employment will one day cease. As younger workers develop a realistic attitude towards retirement and are able to plan for it, the adjustment to “force” leisure will probably be seen as a more positive experience.

Finally, retirement can be viewed as a “sociable role”. The retiree is expected to cease while engaging in work related roles while increasing the time spent with family and friends in leisure and non-work related activities.


The concept of retirement is based on general fact that both productivity and pleasure to work diminish to with old age. Under normal circumstances, the employer would lay off the worker when the cost of retiring him out-weights his contributions to the profitability of the enterprise.

On the other hand, the work would desire to effect a final separation from job when the physical and mental strain or labour (due to old age) outweighs whatever satisfaction or income he obtains from it. However, inpractice, retirement is based on two factors which determine when a worker should retire are:

  1. i) The policy of his employer, the government or the retiring age.
  2. ii) The volition for the worker to retire than normal age of retirement as stated in his condition of service.


According to the Pension Decree No. 102 of 1979, Section 4 (i) the statutory age of retirement for public servant is 60 years while judicial officers retire at the age of 65 years.

However, the Civil Service re-organization decree No. 43 of 1998 has added the modification  that officers should now retire from service on attaining the age of 60 years or 35 years of service to the nation, whichever is earlier under Section 4 (2) an officer may be required to retire from service at any time after has attained the age of 45 years such an officer is to be received three month notice in writing.


Apart from statutory retirement age other reasons for compulsory retirement under the decree no. 102 of 1979 are:

  1. Compulsory retirement for the purpose of facilitating improvement in the organization of other Department or Ministry so that greater efficiency or economy may be effected;
  2. On the service of a property constituted medical board certifying that officer is no longer mentally or physically capable of carrying out the function of his office;
  • Permanent disablement while in service;
  1. On abolition of his office under Section 7 of the Decree 102 of 1979.


Resigning deals with a worker giving up to posts. Although some resignation may permit an organization to a mistake in staffing/to bring “new blood” into the affected units, excessive turnover can be costly.

In addition, investment in recruiting selected and training may be lost too as the human resources potential now unable to the organization.


Several reasons could lead to retirement depending on circumstances and conditions. These include:


Frustration is one of the reasons for retirement. Workers at this point must adjust to a change in jobs. It has been noted that the psychological adjustment to automation is not easy, especially for the older workers. When the worker no longer senses a control over the machine because of its sophistication such a worker begins to feel that he/she is worthless hence frustration sets in.


Another reason for retirement is the family and community pressure occasions do arise especially in a country, whereby family or community requests its son residing and working away from home, to retrieve and take up home responsibilities, such include: care of the old aged parents, taking care of the family properties etc.


The review here is aimed at analyzing the works of other authors on the topics with a view to identifying any relationship between requirement and the efficiency and productivity level of public servants.

The first contribution to this will be from Yeboh, who declares as follows:

Retirement planning is also seen as an investment which increase employee and retire good will. By this, he believed that adequate planning and compensation to works concerning their retirement will bring forth workers goodwill. It will create an enabling atmosphere for good working relationship leading to the elimination of fear and thereby resulting into greater productivity and efficiency on the part of the workers. By implication, Yeboh reasoned that there exist a relationship between efficiency and productivity are retirement from service.

He stated further, while defending the need to plan for retirement that “it help to develop the future and its uncertainties, that is if it reduces risks”. What this means according to him is that workers  have an inbuilt fear of what life would be like after retirement.

Contribution on the issue of declining efficiency and productivity in the public service, Mr. Allison Ayinda a one time permanent secretary traces it to the 1988. Civil Service Reform of General Ibrahim Badamasi Babangida. His reasons was that the politicization of the civil service by the replacement of permanent secretary with that of Director General, the usual practice of appointment on basis of years of service and other such criteria was neglected to the background and learning could be made Director General at the expenses of career civil servants. He reasoned that this led to a fall in efficiency of the service as there was removed likelihood of hardwork along being enough to get one to the pinnacle of service.

The research is therefore of the view that these factors even though contribute to the declining efficiency in the civil service, rather than the problem of poor retirement life after service compliments it my view. Therefore on the 1999 reform and also of the enumeration of civil servants and their retirement package and condition will lead to an improvement. It will also help to reduce corruption in the service on a long run thus bringing back lost glory of the service which has been reduced to a more tool of politicians seeking public office.


In views of this heading, the researcher intends to see the authors on the topics with a view to determine whether or not effective or ineffective managements of retirement benefits contributes to the nature of retirement for workers.

Contributing authors to this topic Sylva Manit Ngur to her, management of retirement benefits has often constituted a major technical and social problem in the nearly all society. She puts the blame on those vested with the responsibility of heading the benefits. According to her, they exhibit lack of adequate skills and zeal, which are essential ingredients for the management of benefits, such persons should by normally sound.

Her belief was that if this is done, the hardship faced by retirees will be reduced. She further postulated that retirees themselves must learn proper skills of management requisite to the good keeping of their retirement benefits for their substances. She further summed up the problems associated with poor retirement benefits as follows:

“Unfortunately in this country, however, experience of many retired officers both from civil and Armed forces leaves much to be desired”.

She added that “Records in pension offices and sub treasuries all over the country show that many workers found themselves separated from their jobs without adequate provision for prompt ones plan for their pension and gratuity which shows that whatever, how one’s plan for his retirement unnecessary delay on the payment of the entitlement will lead to disruption in planning and by extension make management of the benefits much more difficult”.



Pension funds ideally are expected to be administered in such a way that the beneficiaries will be able to live after retirement. These funds are managed by the various pension boards being it by state or federal level.

However, the Nigerian pension administration is characterized by so many inadequacies as a result of gross mismanagement, corruption and incompetence of the pension administrators. This situation is a very big setback to national development because pensioners will have to beg for what rightly belongs to them.

Unlike what is obtainable in other countries in the globe, the Nigerian pension scheme has been seen as another form of advanced fee fraud a.k.a. “419” situation which subjugates to those who are almost due for retirement.


As highlighted above, pension funds administration in Nigeria is characterized by so many problems, some of these are hereby illustrated.

  1. CORRUPTION: Many pension administrators in Nigeria is the theory of quick money syndrome they tend to embezzle money in their possession at the detriment of the beneficiaries.
  2. LACK OF COMPETENCE: In competence personnel are often saddled with the critical task of computing pensions lists and accounts, this will no doubt result in wrong placement of document and misleading information.
  • IMPROPER PLANNING FOR RETIREES: The Nigeria pension scheme always lacks the ability to plan ahead of retirement everything is always done by the fire-brigade approach which often results in colossal losses.


To actualize a pension fund administration that can stand the test of time, the federal Government has taken giant studies aimed at addressing the inadequacies experienced in the past and these include:

  1. The presidency is now saddled with the responsibility to monitor and supervise closely the activities of the Nigerian pension administration.
  2. Pension funds deducted from workers salaries are not longer going to the coffers of pension scheme but to recommend banks who in turn pay such monies to the beneficiaries on request of the pension board.
  • Plans are on the way to make the board fully computerized to enhance good record storage and retrieval.


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