ADMINISTRATION OF PENSION SCHEME AND PENSIONERS’ WELFARE: A STUDY OF ADAMAWA STATE PENSION BOARD, FROM 2004-2014

ADMINISTRATION OF PENSION SCHEME AND PENSIONERS’ WELFARE: A STUDY OF ADAMAWA STATE PENSION BOARD, FROM 2004-2014

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GENERAL INTRODUCTION

1.1 Background to the Study

The administration of pension scheme is not a contemporary phenomenal or practice. Memorably, it can be traced back to 13BC. The earliest record of payment of public sector pension dates back to the Roman Empire times when in 13BC, Emperor Augustus Caesar paid pension to the Military and loyal civil servants to boost their welfare. This was to secure the active loyalty of troops who were then the sole determinant of power in the realm and further conquest. Thus, it was a kind of reciprocal or compact arrangement. The pension was first paid from Augustus‟ personal funds and later taxes of 5% were levied on inheritances and 1% sales tax to meet the pension liabilities of the emperor. Three thousand denary was paid to Legionnaires after 20 years of active duty and 5 years in reserves. This had the effect of making beneficiaries‟ instant millionaires by the standards of the time.

According to Stephen (2012), the history of public pension in modern Europe started with disability compensation to soldiers. A good example was the scheme established by the British parliament in 1592. By the 18th Century all major European nations maintained some form of pension for their officer corps. However, these pension schemes were not very popular because of the perceived bias of the schemes for the military. The primary aim was to keep the military in total subjugation and commitment to the leaders of the time as military might guaranteed state power and sovereignty at the particular time in history.

Stephen (2012) maintained that in modern times, the United States public pension system, otherwise known as U.S. Social Security (Old Age, Survivors and Disability Insurance)

(OASDI) is a social security insurance created by the Republican Government of Franklin Delano Roosevelt in 1937 during the great depression, following the stock market crashes of the late 1920‟s and early 1930‟s. Retirement benefits payment is the largest component of OASDI.

The scheme was unfunded though as payment of retirees were financed by payroll taxes of current workers to enhanced their wellbeing or welfare depending on workers earning records at an age of retirement.

In Nigeria, Pension schemes were introduced into the public service in the early years of the 19th Century as evidenced in Pension Proclamation No. 14 of 1901 of the Northern Nigeria Protectorate and the Pension Ordinance No. 4 of 1902 of the Colony of Lagos and pension Ordinance 1951. Until 2004, there were a myriad of enactments that regulated the administration of pension schemes in Nigeria (Balogun, 2006). They include the Constitution of the Federal Republic of Nigeria, 1999 in Sections 173 and 210, the Pension Act Cap 346 Laws of the

Federation 1990, the National Provident Fund Cap 273 Laws of the Federation 1990 and the Nigeria Social Insurance Trust Fund Act, 1993 amongst others.

In order to have an in-depth knowledge and understanding of the direction of changes in pension reform, it would be useful to first of all understand the antecedents of pension system in Nigeria. In the public sector, (both civil and public services, statutory bodies), pensions were governed by the Pensions Act of 1979, later the Pensions Act of 1990 as amended by the Pensions Regulations of 1991. The Act provided for benefits in terms of gratuity and pension payments. Gratuity is a single, lump sum payment while pension is a periodic payment, normally on monthly basis for life (Olanrewaju, 2011). The scheme was a compulsory and noncontributory one, which created a right to monetary collection by public servants and an obligation on the part of government to make payment. Thus, the pension Act of 1990 as amended by Pension Regulation of 1991 has set a base for pension right to the retirees and contractual term between the retirees and the government of Nigeria including all levels of governments. Before April 1974, gratuity and pension for public servants were not treated as rights but as privileges. The applicable law provided that no officer shall have an absolute right to …pension or gratuity, Section 6(1). Nevertheless, with effect from 1974, they became rights to which a qualifying public servant was entitled to claim from the government. The general pension scheme for civil servants was financed from government general revenue on a pay-asyou-go basis (Olanrewaju, 2011). This implies that the payment of pension and gratuity become a compact between the state and the retired civil servants in Nigerian governments.

However, this scheme later suffered numerous problems between January 1976 and June 2004. Within this period, there were numerous maladministration in the payment of gratuities and pensions such as falsification of age, delays in payment, stoppage of payment, under payment, omission of names from the pay-roll, loss of files, long distant travels to receive payments, ghost pensioners, embezzlement of funds, mismanagement and diversion of funds (The Post Express June, 2000),in Olanrewaju (2011). These exploitative evils were purely bureaucratic or administrative. The pensioners had to cry out aloud in streets and mass-media for a positive change (Obi, 2002: 91-100). Thereafter, the Pension Reform Act 2004 was enacted on 25th June, 2004 and became effective on 1st July, 2004 to redress these problems in the scheme.

Adamawa State as a component unit of Nigeria federation, is not immuned from these problems mentioned above, and is yet to start the process of adopting the new (Act 2004) contributory scheme which is perceived as a solution to the problems of the Pay As You Go Pension Scheme as shown above.  (Daily Independent May 13th,2014) As such, pensioners in the State are still suffering from the inherent problems in the administration of Budgetary Scheme discussed above since the State is still yet to adopt the new contributory pension scheme. 

1.2        Statement of the Research Problem

 The non-payment of gratuity and pension to retirees in Adamawa State has become a problem since the creation of Adamawa State on the 27th August 1991 from the former Gongola State. The budgetary system or defined benefit pension scheme were in operation in the defunct Gongola State which was inherited by the Adamawa State till date. It was first controlled and managed by the Office of Establishment of the State before the establishment of the Adamawa State Pension Board. 

 Prior the year 2000, the administration of pension and gratuity of workers in Adamawa State had been an issue of serious concern. There are many records of unpaid pension and gratuity among retirees, stoppage of their monthly pension as well as delay in the payment of retirees their retirement benefits, among others. The non-payment of workers entitlement at the end of meritorious services in Adamawa State has led so many retirees into abject poverty and subject of ridicule in some localities, which in turn mutilates their welfare in the State and thwarts their social ways of lives.  

 In 2000, the Adamawa State government deemed it fit to establish the Adamawa State pension board and to provide for matters incidental thereto. The pension board following the law is mandated to ensure effective pension administration in the state via the budgetary or Pay As You Go Pension Scheme, to minimize the incidence of ghost syndicated pensioners, ensure efficient and prompt payment of gratuity to retired civil servants in the state, to further ensure regular payment of benefits to pensioners etc. (Adamawa State Pension Law, 2000).

 In spite of the efforts by the government through the establishment of the Adamawa State pension board in order to redress the aforementioned problems, there still seems to be an increasing cases of delay in the payment of pensioners‟ retirement benefits, under payment of pension and gratuity and the stoppage of the payment of pensioners‟ monthly pension to the extent that it forced or compelled so many retirees to involved themselves into  the act of some societal vices such as theft, loss of trust by their debtors, house to house begging and even fraudulent attitudesto earn living. The frequencies of these abnormalities recorded  for example include 34 cases of under payment of pension and gratuity, 33 cases of delay payment of retirees, 20 cases of nonpayment of death benefits, 39 cases of omission of names from the pay-roll, 40 cases of loss of files of pensioners, and 37 cases of unpaid pension and gratuity within the period of the study (2004-2014) among others. In addition, some administrative or bureaucratic irregularities including the channeling of numerous grievances or complaints to the Public Complaints Commission (PCC) in Yola, are rumpus, (PCC Register of cases, 2014). As a result, many pensioners were owed months of pension benefits which hypothetically undermined their welfare.

 The study therefore attempts to investigate why retirees are suffering from cases of unpaid gratuity, pension and other related allowances in spite strides made by the Adamawa State government by establishing the Adamawa State pension board and charged with viable functions to mitigate the problems of pension and other related matters therein.

1.3        Research Questions

i.             To what extent has delay in the payment of pensioners‟ retirement benefits has affected the welfare of pensioners in Adamawa State? 

ii.           How under payment of gratuity and pension entitlement affected the welfare of pensioners in Adamawa State? iii. To what extent has stoppage of the payment of pension benefit affected the welfare of pensioners in Adamawa State? 

1.4        Objective of the Study

The main objective of the study is to assess the impactof administration of pension scheme and pensioners‟ welfare in Adamawa State pension Board. Specifically, the study seeks to:

i.  examine the extent to which delay in the payment of pensioners‟ benefits affected pensioners‟ welfare in Adamawa State.  ii.  determine how under payment of gratuity and pension entitlements has affected the welfare of pensioners in Adamawa State. 

iii.  determine how stoppage of the payment of pension benefit affected the welfare of pensioners in Adamawa State.

1.5        Hypotheses 

Ho1:  Delay in the payment of pensioners‟ retirement benefit has no effects on pensioners‟ welfare in Adamawa State.  

Ho2: Under payment of pensioners‟ gratuity and pension entitlements does not affect the pensioners‟ welfare in Adamawa State.

Ho3:   Stoppage of the payment of pensioners‟ pension has no effect on pensioners‟ welfare in Adamawa State.

1.6        Significance of the Study

A study carried out by Olu et al (2005) study on the “management of pension scheme in Nigeria” focused on the upward review of pensions and gratuities in the

administration of pension scheme in Nigeria. Their study revealed that the upward review of pensions and gratuities in the country without appropriate financing the scheme is the major problem of pension administration in Nigeria.

The study by Olu et al (2005) left a wide gap that desired to be filled. For example, the study failed to take note of some of the administrative deficiencies such as workers‟ inefficiencies, inadequate skilled personnel, political interferences in the activities of the pension officers, corruption and lazier-fare leadership leading to delay in the payment, under payment and the stoppage of the payment of retirees‟ benefits which this study attempt to fill. Also, a study by Omoni (2013) on „an overview of the administration of new pension scheme and teachers‟ level of awareness in Delta State of Nigeria” left a lot of loop-holes. For example: Her methodology was not good enough to generate all relevant data in order to strike balance and ovoid bias, since only questionnaire instrument were used and was served only on the teachers and sidelined staff of the primary  schools Board and ministry  of Education. The study also neglected one important unit of the population completely, that is staff of the pension administration and dealt with only primary and secondary schools teachers. 

Obi (2013) conducted her own study on the Corrupt Practices in Nigeria‟s Retirement and Pension Scheme; she focused on delay in the payment of gratuity and pension. Here methodology also was weak because she used questionnaire instrument only on pensioners and neglect the pension officers completely as if the views of the pension officials are not important to the study.Besides, the studies also did not cover Administration of Pension Scheme and

Pensioner‟s welfare, and did not focus on under payment as well as stoppage of the payment of retirees; therefore they failed to determine the effects of the stoppage and delay in the payment as well as under payment of pensioners‟ benefits on the pensioners. 

In respect of the significance of the study therefore, this study attempts to fill the identified gaps or loop-holes of the studies above. Beside these ones above, it is an undisputable fact that several efforts have been put by government and practitioners alike, as well as scholars to mitigate the problem of bureaucratic or administrative problems in the administration of retirement benefits; there are still some major gaps to be filled in this area which this study seek to fill them as well. 

Another importance or significance of this study cannot be over emphasized, in view of the fact that little or no study has been done by scholars or researchers in relation to

Administration of Pension Scheme and Pensioners‟ Welfare in Adamawa State. Hence this study or research work will go a long way in contributing to the few existing literature on this aspect, especially in Adamawa state.

 It can also serves as a stepping ground for other researchers on the topic. Similarly, it will serve as an eye opener to the general public, most especially to the civil servants in Adamawa State, and Nigeria at large, to see the need to make adequate preparation before retirement from service in terms of saving. And also to prepare psychologically perhaps one may be faced with challenges of uncertainty in life after retirement.

1.7        Scope and limitation of the Study 

The scope of this study is viewed from three perspectives. It measures scope in terms of geographical coverage, scope in terms of time limit and scope in terms of substance of the work.

In terms of geographical coverage, the study covered Adamawa State as a whole and all Public Service in Adamawa State. The justification for this coverage is based on the fact that the organization under study is heterogeneous in nature; its members or beneficiaries come from every nook and corners of the state and covered all the public organizations.

In terms of time frame, the study covered a period from 2004 to 2014. The justification for the choice of this period stemmed from the fact that in the history of Adamawa State, this period had recorded the highest or massive retirement of civil servants in the State.

It can also be justified on the ground that based on the secondary dada available; the frequencies of complaints received by the Public Complaint Commission on delay in the payment, under payment, stoppage of the payment of retirees‟ benefits from retirees in the State falls within this period and kept on increasing. 

 Scope in terms of substance, this study covered Administration of Pension Scheme and pensioners‟ welfare in Adamawa State (Pension Board). It limits its self to bureaucratic operations because the issue under study is purely within the ambit of bureaucratic operation. And it is restricted only to budgetary pension scheme that is fully (100%) funded by the government (Defined Benefit or Pay As You Go Scheme) which Adamawa State is still practicing up to date, and not the Contributory Pension Scheme.  

However, the study is not without limitation in terms of drawback. Focus group

discussion with the association of retirees would have been part of the methodology which would have added quality to the study, unfortunately all effort to do that were shattered due to the state of insurgency in the State as at thatmoment, where the leader of the union sought for the guarantee of their security against any uncertainty from the researcherand their transport faire before he would agree to array his members for that purpose.Unfortunately, the researcher had no capacity to guarantee any security of a person or group of persons, particularly that period, and had no money to transport them from their various destinations for the group discussion.                      Also, Mubi north from the Adamawa Northern Zone would have been part of the sample areas of the study as was designed in the methodology, but the researcher was retrained from reaching out the area due the said insurgency which engulfed the whole Nothern part of the State as at the time of sourcing of the data. This led the researcher to pick Yola South one of the constituent of

the state capital in the place of Mubi North since most of the survivors of the insurgent from the Northern Zone fledto the State Capital.

The Nigeria freedom of information act 2011 also was not respected by the staff of the pension Board. A lot of unclassified information which would have added quality to this work was denied the researcher during the interview. Also, time and finance were not at the advantage side of the researcher. 

1.8        Operational Definition ofConcepts.

 This aims at operational definition of all unusual terms whose meanings are not obvious or the meanings are not ordinarily known. Such terms are defined the way they occur or used in this study. This is to avoid confusion and misinterpretation by a reader. However, the researcher chooses to define such concepts or terms conceptually or authoritatively first, before operational definition will follow where necessary. This is to provide a reader better understanding and help to distinguish between the authoritative and working(operational) definition of each term.

1           AdministrationofPension Scheme:  

According to John (1960) in Paul (2013) administration is the determined action taken in pursuit of conscious purposes. It is the systematic ordering of affairs and the calculated uses of resources, aimed at making those things happen which we want to happen, and at the same time preventing developments that fail to square with our intentions.Pension scheme according to Tijjani(2007) can be seen as government plan or program in form of policy through which retirees or somebody else pays regular amount of money to enhance the state of his welfare.

However, Administration in this study is operationally defined as the mobilization and direction of effective human and financial resources for the prompt, regular, continuous and correct payment of the retirees‟ retirement benefits (pension and gratuity) to the extent that there would be no delay in the payment, no under payment and no stoppage of the payment of pensioners‟ retirement benefits (pension and gratuity) in Adamawa State Pension Board.   On the other hand, pension scheme is operationally defined as old budgetary pension scheme that is 100% sponsored by government or an employer.  

2           Delay in the payment

The Adamawa state pension law section 8 (1) specified that the procession of benefits of retired civil servant of the State shall be completed and ready for payment one month to the officer‟s official retirement date to avoid financial handicap at retirement. Based on this provision, delay means if an officer is not paid his pension and gratuity as soon as he/she is retired.

However, delay in payment as used in this study or operationally defined as failure to pay the retirees their pension and gratuity within two months time (60 days) after their retirement.   

3          Under payment  

Under Payment is operationally defined as the payment of the retirees their gratuity or pension less than the official amounts that were supposed to be paid to them.

4          Stoppage of Payment

This is a situation where the payment of monthly pension is suddenly cut-off or stopped and the retirees no longer get their monthly pension. 

5 Pensioners’ Welfare: Williams (1976: 281) viewed welfare as a concept derived from well-fare that is “well” in its still familiar sense and “fare” primarily understood as journey or arrival but later also as supply of food, well-being, happiness, health and prosperity of a person. Also Pa‟ag (1993:31) perceived welfare as the evaluation assigned by the individual to income or, more generally, to contribution of our well-being from those goods and services we can buy with our money.

However, pensioners’ welfare in this study is operationally defined as the prompt payment of pensioners‟ pension and gratuity, no delay, non stoppage of pension and no under payment of pensioners‟ retirement benefits to the extent that the pensioners and their families can be able to: 

i.      eat three square meal of  balanced diet a day and drink clean water ii.         afford and access health facilities iii.           afford to pay children‟s school fees

iv.          Wear good and functional clothes and be able to change it over time.

afford housing or shelter for themselves  vi. be looking healthier, happy and prosperous


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