Impact Of Retirement Benefits On The Living Condition Of Retiree

1.0 Introduction

Retirement benefits aid the retirees to sustain themselves when they are out of job or too old to do any other thing. This accounts for the importance government everywhere attaches to retirement benefits; at least to cater for the welfare of their retirees, who had spent the productive part of their life working for the growth and development of the country.

One of the retirement benefits well known the world over is pension. It is the amount paid by government or company to an employee after working for some specific period of time, considered too old or ill to work or have reached the statutory age of retirement (Adam, 2005).

As a scheme, Pension is the periodic payment granted to an employee for services rendered, based on contractual legal enforceable agreement, paid by an employer at the agree time of termination of appointment (Iwu, 2007).

Pension in Nigeria could be traced to the 1951 Pension Ordinance which was the first legislative Act, this was followed by the establishment of the National Provident Fund (NPF) in 1961 to cater for pension issues in the private sector (Ayegba et al, 2013).

In 1979, the Pension Act No. 102 and Armed Forces Pension Act No. 103 were instituted.

Subsequently in 1987, the police and government agencies pension scheme was established under Pension Act No. 75 of 1987 (Ahmad, 2006). Similarly, in 1987, the local government staff pension board was established to take care of pension matters among local government employees. The shortcomings of the previous scheme heralded the National Social Insurance Trust Fund (NSITF) in 1993 to address pension and retirement issues in the private sector (Ayegba et al, 2013).

The defined pension scheme was characterized by series of problems ranging from lack of fund to the presence of ineligible pensioners on the pension payroll. To address these problems, the Federal government in 2004 introduced the contributory pension scheme (Umar et al 2012).

As a result of the obvious lapses in the Pension Act of 2004, the National Assembly in 2014 amended the Act. This was signed into law in July, 2014 by President Jonathan as Pension Act, 2014.

Despite the visible efforts by the government to caterfor the welfare of these retirees, most of them still find it difficult to receive their pension at the end of every month; and this has left the retirees to leave a life of misery and penury.

The new pension scheme introduced in 2004 was received with accolades and cheers especially from would-be-retirees and pensioners who hitherto saw the old scheme as ineffective occasioned by weak administration and corruption, as well as unreliable records keeping (Ohai et al, 2013). Shortly after coming on board, many Nigerians became uncomfortable with the activities of the Pension Fund Administrators and Pension Fund Custodians.

Significantly however, many pensioners and would-be-retirees are not well informed about the operations of the new pension scheme. This low level of awareness has triggered off anxiety and uncertainty about their retirement years (Omoni, 2013). Furthermore, the National Pension Commission (PENCOM), saddled with the responsibility of regulating the activities of the Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) lacks the regulatory capacity to check the excesses of the PFAs and PFCs. As Herskovit (2007) observed that with the level of corruption in the country, it is doubtful that one regulatory body like PENCOM could check fraud by PFAs and PFCs.

More importantly, pensioners across the country still witness irregularities and nonpayment of their pension as and when due. Review of Public Administration and Management Vol. 3, No. 6, December 2014 182

1.1 Background Of The Study

One of the reasons why the old pension scheme was jettisoned was because of lack of fund and late payment of pensioners’ benefits. These and other palpable reasons pauperized and reduced Review of Public Administration and Management Vol. 3, No. 6, December 2014 188 the retirees to live in misery to the extent that some people referred to them as “dead woods”.

However, the introduction of the new pension scheme rekindled their hopes and the hopes of would-be-retirees. Significantly, the turn of events in recent days as regards late payment or non-payment of pension is beginning to dampen the hopes of these people the disparity between the old pension and the new pension.

According to them those in the old pension received about 80 percent of their money while those in the new pension received less than 30 percent (FRCN, News, 2015). More importantly, the Pension Reform Act of 2004, section 4c stipulates that: “Retirees will have not less than 50% of their last pay as monthly pension as at the date of retirement”.

Unfortunately, none of the retirees enjoyed this amount since the inception of the Act till date Kajusola, 2015).

Furthermore, the old pension scheme was characterized with late payment, and the new scheme was meant to ensure that retirees received their pension as at when due.

However, most retirees do not get their entitlements as at when due. Some are owed for up to 10 months due to some administrative bottle necks either from the Pension Commission or the Pension Fund Administrators. Derowoju, (2012) noted however that many retirees’ benefits are delayed because some of them do not inform their Pension Fund Managers before retirement; this results to late clearance from the employers and incomplete documentation with the PFAs.

Other factors for the delay of payment include; failure to notify. Again, the investment of Retirees’ contributions take some time to produce returns and this often causes some delays in paying the pensioners their benefits. As Adedeji (2013) observed that returns can be inversely correlated so when one is up the other is down, some assets are long term in nature and may take time to generate returns, thus the delay in these returns, delay the payment of pension to retirees.

Furthermore, the contributory pension scheme is still haunted by the old fears of traced and corruption that encumbered the old national pension fund. Already there are complications in the form of sharp practices among the staff of some unnamed PFAs have manifested in the new pension scheme (Ohai et al, 2013); and these complications have resulted in non-payment of some pensioners in the new scheme their complete retirement package (Kajusola, 2015).

Review of Public Administration and Management Vol. 3, No. 6, December 2014

The research intends to investigate the impact of retirement benefit on the living condition of retirees in Alagbole Area Of Ogun State

1.2 Statement Of The Problem

The problem confronting this research is to investigate the impact of retirement benefit on the living condition of retirees in Alagbole Area Of Ogun State. The recurrent nature of policy changes on retirement benefit seems rather difficult to understand and does not conform with current economic realities facing retirees.

1.3 Research Question

What is the nature of retirement benefit in Nigeria?

What is the impact of retirement benefit on the living condition of retirees in Alagboole Area Of Ogun State?

1.4 Objective Of The Research

To appraise the nature of retirement benefit in Nigeria?

To determine the impact of retirement benefit on the living condition of retirees in Alagboole Area Of Ogun State?

1.5 Significance Of The Study

The study shall analyze the nature and impact of retirement benefit on current economic realities facing retirees with a view to providing recommendations on retirement policy formulation and implementation.

1.6 Statement Of Hypothesis

H0- The level of the living condition of retirees in Alagboole Area Of Ogun State is low.

H1- The level of the living condition of retirees in Alagboole Area Of Ogun State is high.

H0- The level of retirement benefit of retirees in Alagboole Area Of Ogun State is low.

H1- The level of retirement benefit of retirees in Alagboole Area Of Ogun State is high.

H0- The impact of retirement benefit on the living condition of retirees in Alagboole Area Of Ogun State is low.

H1- The impact of retirement benefit on the living condition of retirees in Alagboole Area Of Ogun State is high

1.7 Scope Of The Study

The research is focused on appraising the impact of retirement benefit on the living condition of retirees in Alagboole Area Of Ogun State.

1.1 Definition Of Terms

Pension

Pension is the periodic payment granted to an employee for services rendered, based on contractual legal enforceable agreement, paid by an employer at the agree time of termination of appointment (Iwu, 2007)

Retirement Benefit

Retirement benefits aid the retirees to sustain themselves when they are out of job or too old to do any other thing. This accounts for the importance government everywhere attaches to retirement benefits; at least to cater for the welfare of their retirees, who had spent the productive part of their life working for the growth and development of the country.

One of the retirement benefits well known the world over is pension. It is the amount paid by government or company to an employee after working for some specific period of time, considered too old or ill to work or have reached the statutory age of retirement (Adam, 2005).

As a scheme, Pension is the periodic payment granted to an employee for services rendered, based on contractual legal enforceable agreement, paid by an employer at the agree time of termination of appointment (Iwu, 2007).