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The work that one does gives statues to the person.  It also gives a meaning to life and feeling of contribution to general welfare.  Work also permits a person to be active, energetic and to have constructive social interaction with others. Inspite of the fact that work brings fulfillment, one must retire from active service for one cannot deny the fact that as workers grow older, they make many adjustments and tend to develop gradually into a social group that is separate from the younger workers.  Increasing physical and mental limitation associated with advancing age make it difficult for such people to work safely and competently thereby maintaining previous levels of performance. At the stage of retirement, the worker’s output reaches diminishing returns.  It became necessary for the workers to stop working if his employer wants to minimize loss although not everyone would welcome the idea of retirement even with a generous pension.

          Retirement, as defined by J. A. Donnelly et al (1992:326), is the changes in job situation whereby the individual gives up his job when diminishing return set in.  Eze (2001:15) explained retirement as the stage where the employer is dissatisfied by the job performance of the employee.

          The German chancellor, Otto Von Bismack in the 1880s, started the concept of retirement.

          His public pension plan supported a retirement age of sixty-five years (65). Insurance companies began to use that retirement age in planning retirement and annuity programmes. Though the retirement age vary in countries and organizations, Nigeria operates one of the most generous pension scheme in the world.  After ten years of service an employee qualifies for pension.  An employee could then retire and enjoy the rest of his active life.

          Result of Nigerian pension scheme is that the public service is seen as being more lucrative in terms of a person work life.

          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 with life.  Several reasons have been given for the need fro such compensation.  Prominent among the reasons is to provide economic security for the employee at retirement.  Secondly, it guarantees the willingness of the younger generation to work and also see the organization as a good place to work in.

          The compensation paid to the worker at retirement is known as pension.  It is a contractual payment between the employer and the employee. The employer, after retirement, pays a state sum of money periodically over a stated period to the retired employee (Jerry et al, 1992:333).  This money, as envisaged by economic planners, will then fulfill the three basic needs for the payment of pensions, which prominent among them is economic empowerment. Economic empowerment, through the payment of pensions is intended to be used in social welfare programmes whereby the worker that is retired is expected not to depend on the society for his livelihood.  It is on this note that the federal government of Nigeria established the state pension scheme under decree 102 to 1979, which decreed that pensions be paid to retired workers effective from 1st April 1974.  The decree put pension board under the Department of Establishment/pensions of the Nigeria Public Service.

          The department then instructs the ministry of finance to pay. Precisely, the pension boards are to see, principally, to the welfare of the workers in the public service. The objectives for setting up these boards are not short of the objectives mentioned earlier about the reasons for the compensation of retired workers.

          It is clear that the pension scheme has several shortcomings.  It is also apparent that the downfall of any organization is never far from mismanagement.  It is therefore of great importance to carryout a study on the management of pension schemes in Nigeria to find out the lapses.

          The need fro the study be linked to economic empowerment, restoring the dignity of the worker and creating a place for the younger generation.  The government is seen here, as the employer while the public servant is the employee the study will concentrate on management of the schemes and the areas of shortcomings.  This important because Osuagwu (2002:12) have observed that bureaucratic bottlenecks are hindrances to management of pension schemes.  He however contended that dwindling resources is not short of the reasons for such problems.  This research will investigate the government and the pension managers to ascertain  the origin of the problems.


          The issue at the back of government mind while establishing the pension scheme is to provide the employee with a means of securing on retirement a standard of living reasonably consistent with that which they enjoyed while in service (Osuagwu: 2002:1).  Several years later, we can see that the reverse has been the case.  The worker dreads retirement, just like death.  In developed countries, the worker looks up to retirement.  The  reasons for these are not short of mismanagement.

          The management of pension schemes has made things so hard for the workers that a retiree has to travel long distances to get his pension paid.  It has been observed that those who are retired, while pursuing pension papers in Abuja or Lagos end up running out of cash to sleep under bridges, railway stations, post offices, churches and mosques.

          The head of service of the Federation Dr. Yayele Ahmed while addressing pension desk officer said, among other things, “pension schemes in Nigeria have become inefficient mainly due to inadequate funding, ignorance of employers, mismanagement of funds and gross indiscipline of pension managers”. The effect of those to our economic development could be very drastic.  That is why this research is intended to suggest solutions to the problem of mismanagement of pension schemes as a hindrance to the fight against bribery, corruption and also the moves for national development.  This research deals secondly with the problem of weak financial base as the most delimiting factor towards the management of pension schemes.


This research has several objectives which together points to the ultimate goal of enhancing social welfare.  These objectives are as follows:

(a)         To investigate whether non-payment of pensions can be blamed on the politician or on the economic situation of the country, which might leave government with little money to spend.

(b)         To explore the flow of workers that retires with the flow of funds from the Ministry of finance.

(c)         To investigate how concerned government is in terms of having a special monitoring and evaluation units to check on the excesses and short coming of pension managers.

(d)         To establish a relationship between the non-payment of pension and unwillingness to relinquish office after reaching retirement age.

(e)         To find out the extent of bribery/corruption in pension management.

(f)          To make necessary recommendations on these problems. 

1.3.1 Problems That Concerns Pension Schemes

The theoretical framework:  A theory is an idea or group of ideas put forth by an individual or groups of individual on how a particular management problem can be solved (Ile; 1999:1). It is on this note that we employ a theoretical framework for this research.

          The research is therefore based on the theoretical foundation of Douglas McGregor.  This theory published in 1960 is linked to this research in terms of managing worker relationship.  The theory holds the following grounds.

(a)         Commitment objectives is a function of the rewards associated with an organizations achievement. This is in terms of conducting the activities of pension boards to fulfill its ultimate objective of having a worker transit smoothly, from salary to pension without tears.  (Idakwo; 2002:10).

(b)         The expenditure of physical energy in work is as natural to play or rest.  This postulation is important because it portrays work as something to be enjoyed.  It is important to uphold these generalizations so that the retired worker will not find to his dismay that he faithfully worked for a corporation without a pension scheme on retirement.  Based on the theoretical framework, the research will set to clarify objectives, responsibilities and benefits associated with pensions and pension scheme.


In the exercise of the exclusive powers of the Federal Government over matters relating to pensions, the pension Act No. 102 of 1979 came into existence.  Other enabling laws such as the Armed forces pension Act No. 103 of 1979 and the pension Rights of Judges Act No 5 of 1985 as amended in Act No. 51 of 1988, 29 of 1991 and 62 of 1991, back it.  The state governments are responsible for the funding of retirement benefit of their staff from the state annual budget.  The states apply (since the Acts put it entirely on the exclusive list) all the laws, circulars, rules and regulations on pension matters issued from time to time by the establishment and pension office.

          Due to this wide scope of pension management, this research will be narrowed to the activities of the Department of pension/establishment, Enugu State Public Service Commission covering the period of 1992 – 2002.

1.4.1 Limitation of the Study  

This is because of the following limitations.

(i)           It is evident that the researcher cannot find the time to travel all the country, visiting the department of pension establishment in the various  the department of pension establishment in the various  states to gather data regarding the study.

(ii)         Another limitation is that some of the workers in the department of pension/establishment may not be willing to provide real facts that will help in the research work.

(iii)        Money is another limitation.  But for lack of adequate funds for this research, regular visit could have been made to the department of pension.  Transport fares therefore posses a limitation.  Also, there was not enough money for such.  Other things as stationary and browsing for more information.


Bureaucratic:     This is derived from the word bureaucracy.

Bureaucracy is an organization that is made up of people, strictly ruled by a set of rules and regulations.  Bureaucratic is used to portray conservatism.

Decrees; These are laws made by a despot.  It is the way of making laws in military government.  The laws made by the highest ruling body during a military regime as known as decrees.

Diminishing returns: The law of diminishing returns state that as more of a variable factor of production is added to a fixed supply of land, a point will reach when average output will diminish.  This necessitates the retirement of old snapped workers to make room for the younger generation.

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