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The broad objective of the study is to assess the pension reform agenda of Olusegun Obasanjo Administration 2004; a study of Federal Ministry of Interior, Anambra State. The descriptive research method was used in carrying out the study, the method was chosen because it is the method that best interprets the study without loss of facts. The research findings revealed essentially that;

i. Government has not worked out the modalities properly on the separation from the erstwhile old scheme from the new one.

ii.   The reform agenda depends on government’s yearly budgetary allocations, which also depends on who is in control of the machinery of government and the revenue condition’s of the Federal government.

iii.   The obvious escalating expenditure of government in other areas such as education, agriculture, health and administration that compete with pension expenditure, government can not be trusted to solely pay pension.

Based on the findings, major recommendations are that;

i.   Government should try as much as possible to increase her contributory part to fifteen percent(15%), while the employee should contribute five (5%) only, reason been that employees should be assisted in the provision of individual socio-economic needs while in active services.

ii.   Various levels of government should be mandated to keep a fixed percentage of their revenue with the Central Bank of Nigeria (CBN) to carter for pension need of their workers as a way of securing the future of the retirees.

iii.   Any pension fund administrator, custodian that is found uncomfortable or dubious in his transactions should be blacklisted instantly and pension fund records and funds in his keeping be retrieved and transferred to another custodian or administrator.

iv.   Government should mandate all the PFAs to pay interest rates according to all the customers.



1.0                                                           INTRODUCTION


Prior to the enactment of the Pension Reform Act 2004, pension scheme in Nigeria had been bedeviled by many problems. This scenario necessitated the introduction of a new regime in Nigeria by the administration of President Olusegun Obasanjo. The pension system, unless specially adopted to meet the hardship of time, results in hardship to the family of a white or blue collar worker who dies prematurely in service, or on the verge of retirement or before enjoying the pension benefits for any appreciable period, [Abah, 1999]. However, pension can be classified as contributory and non-contributory pensions. A pension scheme is said to be contributory when both the government and the employee contribute [not necessarily equally] towards its payment. It is non-contributory if the whole amount for its payment is funded by the government or the employer only, (Chukwuemeka, 2008). Factually, the emergency of pension scheme allowed workers to retire and the changing attitudes made it socially acceptable to do so.


The country operated Defined Benefit Scheme (gratuity and pension) between January 1, 1946 and June 2004. Nigeria in 1951, introduced pension benefits into the public sector with effect from 1946, the idea brought about a major attraction for employment in the public service. Nevertheless, the pension Act 102 of 1979 was the main legislation guiding the entire public service. To qualify for pension then, the officer involved must have served for a minimum of 15 years and gratuity period was a minimum of 10 years of service. By 1992, it was reformed to minimum of 10 years for pension and 5 years for gratuity. One notable fact during the period was the pension scheme success recorded by the private sector. Most schemes in the public sector were insured schemes defined by contributions of employees and employers. It provided large sum of retirement benefits or earlier withdrawal. Pension fund managers, portfolio managers, bankers were relevant in pension fund administration in the public sector. Again, decree 77 of 1993 established the Nigeria Social Insurance Trust Fund (NSITF) to replace the old National Pension Fund (NPF) managed by the Federal Government for private sector. Nonetheless, under this scheme, there were poor administration, inadequate delivery


system, and lack of adequate records of movement from one employment to

the other. Again, the Pension Reform Act was enacted on the 25th June, 2004

and came into effect on 1st July 2004. The Reform established a Defined Contributory (DC) scheme against the former Defined Benefit (DB).

Dike, (2006) stated that, ‘the enactment of the new pension Act 2004 signed

into law by President Olusegun Obasanjo on 30th June, 2004 has opened a new vista in the management of pension fund. The present pension scheme regulated by the Pension Commission is public and private sectors driven with government only playing its part by contributing its quota to the relevant pension managers for private and public servants.’

In line with the background information is the issue of pension crisis before

Define Contribution (DC), such crisis were:

=             Pensioners not being paid entitlements regularly.

=             Existence of ghost pensioners in the public service.

=             Pensioners dying on verification queues.

=             Unstructured and unfounded private sector scheme.


=             Diversion and mismanagement of existing pension fund by Board of Trustee (BOT) and fund managers.

Against this background, the under listed formed the main objectives and features of the Pension Reform Act 2004;

I.               To ensure that every person who worked in either the public service of the Federation, Federal Capital Territory or private sector receives his retirement benefits as and when due.

II.          To assist individuals by ensuring that they save for their livelihood during old age and thereby reducing old age poverty.

III. To ensure that pensioners are not subjected to untold suffering due to inefficient and cumbersome process of pension payment.

IV. To establish a uniform set of rules, regulations and standards for the administration and payment of retirement benefits for the public service of the federation, federal capital territory and the private sector.

V.              To stem the growth of outstanding pension liabilities.


In fact, the pension reform programme is governed by the key principles of sustainability, safety, and security of benefits, transparency, accountability, equity, flexibility, uniformity, and practicability.

As the major function of the commission, the pension reform Act 2004 established the National Pension Commission (NPC) as the body to regulate, supervise, and ensure the effective administration of pension matters in Nigeria, ( Other functions of the commission include;

a. Regulation and supervision of the scheme established under the Act.

b. Issuance of guidelines for the investment of pension funds.

c. Approving, licensing, regulating, and supervising pension administration, custodians, and other institutions relating to pension matters as the commission may, from time to time, determine.

d. Establishing standards, rules, and guidelines for the management of the pension funds under the Act.

e. Ensuring the maintenance of a National Data Bank on all pension matters.


f. Carrying out public awareness and education on the establishment and management of the scheme.

g. Promoting capacity building and institutional strengthening of pension fund administrators and custodians.

h. Receiving and investigating complains of impropriety leveled against any pension fund administrator, custodian or employer or any of their staff or agents.

i.           Performing such other duties which, in the opinion of the commission, necessary or expedient for the discharge of

ii.           Its functions under the Act.(National Pension Commission).

Again, the National Pension Commission shall have power to do the following;

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