Contributory Pension Scheme Research Articles

Pay As You Earn (PAYE) Tax as Panacea to Backlog of Gratuities and Pensions of Civil Servants in Nigeria

Gratuities and pensions are payments due to retired civil servants; however, payments of these have not been timely and consistent to the extent that 23 state governments are owing N836.40 billion as gratuities and pension liabilities as of the end of 2022. Non-payment of these retirement benefits is often accompanied by social and health problems, leading to the premature death of retirees. Consequently, this study aims to examine the potential of monthly Pay As You Earn (PAYE) tax to eliminate the backlog of retirement benefits owed to retired civil servants. To achieve this aim, quantitative secondary data of PAYE tax collections by state governments is collected from the annual Internally Generated Revenue reports of states published by the National Bureau of Statistics (NBS) 2010-2022. Descriptive statistical analysis tools are employed to analyze collected data while Burgess’s activity theory and public policy analytical framework guided the conduct of the study. On the overall, results from the study revealed that while the 23 state governments owe N836.40billion as liabilities of retirement as at 2022, the same states have collected the sum of N5,672billion as PAYE tax 2010-2022. On individual states, 20 states have collected PAYE tax 2010-2022 more than their liabilities of retirement benefits, while only three states collected PAYE tax less than their accumulated liabilities of retirement benefits. The short-run policy implication is for states to set aside collected PAYE tax to settle the backlog of benefits and adopt the Contributory Pension Scheme (CPS) to avoid future recurrence of the backlog

Contributory Pension Scheme and Performance of Employee of Unity Schools in South East Nigeria (2005-2019)

This paper critically examines the implementation of the contributory pension scheme in Unity Schools in the south east of Nigeria. The specific objectives were: to determine the extent of implementation of the contributory pension scheme; how it has helped in motivating staff and the challenges confronting the implementation of the scheme in Unity Schools in the South East. Population of the study was 1,091 based on the nominal rolls of the five schools in Enugu and Anambra States. The Sample Size of 293 was determined using the Taro Yamane’s statistical formula of 1964. Three hypotheses were formulated and tested using t-test statistics. Findings of the study revealed that: Contributory Pension Scheme has been fully implemented in Unity Schools; Contributory Pension Scheme has no significant effect on the motivation of workers for efficiency in the discharge of their duties and that Federal Government inconsistency in prompt remittance of its share of the contributions and it’s borrowing from the fund for infrastructural development among others constitute challenges to the implementation of the scheme. Based on the findings, the study recommended that: the Pension Reform Act be further amended to include the payment of gratuity; increase employers contributions from ten percent (10%) to fifteen percent (l5%), and the removal of the 16years limit on pension. The Contributory Pension Scheme is a welcome idea which when properly implemented will eradicate the pensioners’ harsh lives thereby making their dream a reality.

Contributory Pension Scheme and Welfare of Retirees: A case of Tertiary Institutions of Education in Southwestern Nigeria

The study investigated the effect of the Contributory Pension Scheme (CPS) on the welfare of retirees of tertiary institutions of education in the Southwestern zone of Nigeria. Using the Taro Yamane formula and a multi-level sampling technique, a sample size of 125 retirees was obtained from three tertiary institutions of education in the Southwestern part of Nigeria as follows: Osun State College of Education, Ilesa (41), Lagos State University of Education, Lagos (36) and Adeyemi College of Education, Ondo (48). The main instrument of data collection was a set of questionnaire which was administered to the retirees to collect relevant data. The instrument was validated and its reliability coefficient calculated to be 0.82 using the Cronbach Alpha formula. The data collected was analysed using the Chi-square and the one-sample t-test statistics. The results showed that the contributory pension scheme did not have significant effect on the welfare of the retirees (t = .207, p < 0.05). Useful recommendations were made based on this finding.

Assessment of satisfaction with contributory pension scheme among retired staff of the Abubakar Tafawa Balewa University and Federal Polytechnic Bauchi, Nigeria

The new contributory pension scheme (CPS) was introduced by the Pension Reform Act, 2004 reviewed in 2014.The reform became necessary in order alleviate the constraints of Defined Pension Scheme in Nigeria. Evidently the old pension scheme became operationally unsustainable due to deficit funding, weak administrative structure, frequent increase in salary etc. To this end the new contributory pension scheme was introduced in 2004 making it mandatory for both employees and employers to contribute a certain percentage into retirement savings account of individual prospective retiree. This is with a view to build in confidence among retirees of the safety and immediate payment of their benefit. The study intends to assess the satisfaction of contributory pension scheme among retired staff of Abubakar Tafawa Balewa University and Federal Polytechnic Bauchi. The data for the study were generated from primary and secondary sources. The instruments of the primary data collection used were questionnaire and interview, while secondary sources made use of reports, books, magazines, gazettes, journals, research theses and dissertations and the internet. Data were analyzed using descriptive and inferential statistical tools. Questionnaires were distributed on a sample of 107 respondents selected from the population of the study through simple random sampling techniques to test the hypotheses. Chi square analysis tests result revealed that, compliance with the contributory pension scheme significantly improved prompt payment of lump sum benefits and implementation of CPS has significantly improved easy and timely access to pension benefits in RSA by retirees in ATBU and FPTB. However, it was recommended among other things that, PENCOM should ensure the achievement of a competitive return on investment through strong policies that will bring good investment and sustained output growth required to guarantee higher RSA growth and pension payment of retirees to improve the living standard of retirees. PENCOM should ensure close supervision, monitoring and evaluation of the performance of PFA’s in order to achieve efficiency in pension system. This will ensure transparency and continue promptness in payments, which are major setback of the old scheme.

Contributory pension scheme and formal retirement savings: is there a trade-off? -evidence from India’s Atal Pension Yojna using copula regression methodology

Contributory pension scheme and formal retirement savings: is there a trade-off? -evidence from India’s Atal Pension Yojna using copula regression methodology

The Contributory Pension Scheme (CPS) and Sufficiency of Retirement Benefit of the Low-Income Retirees of the Federal Public Service in Nigeria

This study examined the level of sufficient retirement benefit under the contributory pension scheme emanating from the pool of savings contributed that can suffice to provide the minimum needed livelihood. The secondary data of all pension contributions and retirement benefits were retrieved from series of publications of Pen Com from the years 2004 to 2022. The primary data population consists of 1316 retirees. EasyFit 5.6 Professional Software together with the Least Square Model, accumulation and annuity formulae was employed to analyse the secondary data and the responses from the respondents during survey. Arising from the data collected and the analysis carried out using the Consolidated Public Service Salary Structure, the level of comfort of low income retirees who spent 20 to 35 years in active service is nothing to write home about due to insufficient pension benefits as a result of the challenges investigated. The study recommends the implementation of minimum pension derived with requisite modalities of 20 years as the minimum qualifying length of service and only 10-year post retirement subsidy

Employees' Perception of the Contributory Pension Scheme (CPS) and Its Implementation Effectin Malawi’s Shire Highlands Education Division.

There have been dynamics in the pension systems globally which have witnessed various countries embracing the pension reforms within their Pension Scheme arrangements in respective jurisdictions. This evolution compelled Malawi to introduce the Contributory Pension Scheme (CPS) in 2011, targeting all employees, but received it with mixed feelings. This study purposed to establish public secondary school teachers’ perception of the CPS and its implementation effect. The study was guided by three objectives which were; to assess secondary school teachers’ knowledge levels of the CPS; to describe the perception of secondary school teachers about the CPS, and to establish factors that influence secondary school teachers’ perception of the CPS. A mixed method approach was used with questionnaires and scheduled interviews as data collection tools. Slovin’s formulae was used to derive the sample size of 240 employees from the 2000 target population. Purposive and random sampling were used as sampling techniques in which 240 were targeted for questionnaire administration on drop-and-pick-basis, while 5 respondents were selected purposively for qualitative data collection through scheduled interviews. Descriptive statistics was used to analyze quantitative data using SPSS V25 while qualitative data was firstly organized, reviewed and later themedfor content analysis. The response rate was 90.8%. The study results show that secondary school teachers’ knowledge levels of the CPS are low as indicated by 50% of the respondents. Similarly, 57% stated that they do not accept the CPS as a replacement to Defined Benefit Pension Scheme (DBPS) owing to the haphazard manner in which it was implemented with a strong perception that it was devoid of stakeholder consultation / engagement.On the other hand, 62% stated that they did not receive required scheme transaction and funds information of the new pension scheme as a major factor for the none acceptance, contrary to the aspirations of the Agency-Principal Theory. To this effect, the study concluded that despite the many merits of the CPS, employees are lacking some basic information on how their contributions are made, kept, and the pre-retirement utilization of the same by the Administrative Managers. Therefore, the study strongly recommends a paradigm shift in the management and administration of the scheme, by among others, entrenching principles of corporate governance of being transparent, accountable, ethical, responsible, and responsive to the primary stakeholders’ information needs from government and Administrators / Managers of the scheme in the manner of handling the funds on behalf of the pensioners as the same has implications on employees’ work motivation. There must be intentional communication to all pensioners in raising awareness of all activities related, and /or incidental to the pension scheme in order to demystify all misconceptions and negative publicity of funds misuse by the Administrators and Managers.

Contributory Pension Scheme and Workers Investment in Nigeria

The study investigated the relationship between contributory pension scheme and workers’ investment in Nigeria from 2007 to 2021. Specifically the study assessed the relationship between private sector contribution and workers’ investment in Nigeria; examined the relationship between public sector contribution and workers’ investment in Nigeria; and examined the relationship between total contribution and workers’ investment in Nigeria and also employed workers investment (WI) as independent variable while Private Sector Contribution (PRSC), Public Sector Contribution (PUSC), and Total Contribution (TC) as dependent variable. The study also employed Engle Granger Causality Test as estimated technique, the result revealed that a causal relationship between contributory pension scheme and workers investment in Nigeria. Evidence from the result revealed that there is a unidirectional relationship from private sector contribution (LNPRSC) to workers investment (LNWI) (6.41808, 0.0217***), also, there is a unidirectional relationship from public sector contribution (LNPUSC) to workers investment (LNWI) (13.5808, 0.0027***). Furthermore, there is a unidirectional relationship from total contribution (LNTC) to workers investment (7.92275, 0.0127***) and concluded that the direction of the flow comes from pension contribution scheme to worker investment. Therefore, recommended that pension regulatory authorities in Nigeria should compel strict compliance with the relevant provisions of the Act in order for the workers investment to experience the expected quantum growth; and the stakeholders should review the contributions to increase the volume of pension benefits to enable retirees take care of their basic needs at retirement.

Exploring Determinants of Desire Towards Enrolling in Contributory Pension: Evidence from Self-employed and Informal Sector Workers of Sri Lanka

Social security is an essential mechanism for reducing old-age poverty and improving the living standards of vulnerable individuals. One such social security instrument is the contributory pension scheme. This study aims to identify the determinants of self-employed and informal sector workers’ desire towards enroll in a contributory pension scheme offered by the State. A simple random sampling technique was employed to select respondents. Face-to-face interviews were conducted with 300 participants using a semi-structured questionnaire in the Kurunegala district of Sri Lanka. A multivariate logistic regression model was used to examine associations between the independent variables and the desire towards enroll in a contributory pension scheme.The results revealed that female workers, never married and divorced /widowed, individuals in middle-age, having an average education, those with fewer dependents, individuals with middle incomes, and workers with fair financial literacy have a greater probability of enrolling in a contributory pension scheme. Enhancing financial knowledge, promoting financial inclusion, and reducing various structural barriers to pension schemes can significantly foster the retirement planning behaviour of these workers. It is important to encourage target workers, in general, to enroll in a pension scheme, restore confidence in it, and ensure its sustainability. The findings of this study would be beneficial for the development of pension products, particularly to motivate self-employed and informal sector workers to enroll in a contributory pension scheme.

FINANCIAL LITERACY AND ENTREPRENEURSHIP-BUSINESS STARTUP FOR EFFECTIVE POST-RETIREMENT LIFE MANAGEMENT AMONG PRE-RETIREES IN UNIVERSITIES IN EDO STATE, NIGERIA

The role of entrepreneurship to prevent poverty and mitigate other post-retirement challenges has been acknowledged to be crucial for effective post-retirement life management but financial constraints could constitute bane to pre-retirees’ entrepreneurial intentions. Therefore, the study determined the financial knowledge that could spur their intentions and readiness for business start that could enable them surmount post-retirement life challenges. Two research questions guided the study. The descriptive survey research design was adopted and the population comprised all the pre-retirees in universities in Edo State. 250 respondents were randomly selected using the simple random sampling technique from three purposive selected universities. Primary data were gathered through the use of structured questionnaire which was validated and tested to have reliability coefficient value of 0.84. The descriptive statistics of mean and standard deviation were used to answer the research questions and test the respondents’ homogeneity. The findings revealed among others that the respondents perceived the benefits of entrepreneurship-business startup to ensure their effective post-retirement life management but intend to rely totally on their retirement savings benefits with the Contributory Pension Scheme (CPS) for business startup. Based on the findings it was recommended among others that pre-retirees should make contingency savings plan and that the employers and government should provide them financial education in order to acquaint them with relevant financial knowledge to access other forms of business financing such as loans, bank overdraft, angel investors, venture capital and government grants among others prior to final disengagement.

Contributory Pension Scheme and Transitory Job Loss in Nigeria

Surviving the transitional period of job loss before finding a new job poses significant challenges for individuals. Therefore, this study aimed to investigate how the administration of contributory pension schemes affects transitory job loss in Nigeria. Employing an exploratory research design, this conceptual paper reviews existing literature to assess the extent of research on contributory pension schemes and transitory job loss. The study's findings revealed that individuals who lose their jobs encounter difficulties in accessing 25% of their pension contributions. These challenges arise from complex administrative procedures, non-remittance of contributions by employers, and a lack of awareness about the option to access a portion of their contributions in the Retirement Savings Account (RSA) in case of job loss. Moreover, this research indicated that contributors who experienced job loss, particularly during the COVID-19 pandemic, lacked a savings and investment culture, leading to financial hardship during the waiting period to access a part of their RSA contributions. It was concluded that contributors who undergo transitory job loss in Nigeria encounter obstacles in accessing their pension contributions. The study recommends that efforts should be made to simplify the administrative processes involved in accessing pension contributions to ensure a smoother withdrawal experience for contributors facing job loss.

TRANSPARENCY, COMPLIANCE AND SUSTAINABILITY OF CONTRIBUTORY PENSION SCHEME IN NIGERIA

Policymakers have taken cognisance of necessity to improve the transparency and compliance level among parameters of pension reforms. Empirical literature found positive roles of transparency and compliance toward the achievement of pension reform objectives such as sustainability. However, the level of transparency and compliance of pension fund managers and employers of labour under the contributory pension scheme in Nigeria leaves much to be desired. Thus, this study examined the effects of transparency and compliance on the sustainability of the Nigerian contributory pension scheme. Data was collected with the use of survey questionnaires administered on purposive sampling method on the managerial level staff of contributory pension operators and active participants enrolled in the scheme. The data collected was analysed using partial least square structural equation modelling with the aid of Smart PLS statistical application. The results showed that transparency has positively significant effect on the sustainability of contributory pension scheme in Nigeria while compliance has positive but insignificant effect. The study recommends the need for National Pension Commission as the regulator of the contributory pension scheme to strengthen its capacity to enforce adequate transparency and compliance level among the operators and employers of labour in contributory pension scheme in order to achieve not only the sustainability but other objectives of contributory pension reform.

The Contributory Pension Scheme (Cps) and Sufficiency of Retirement Benefit of the Low Income Retirees of the Federal Public Service in Nigeria

This study examined the level of sufficient retirement benefit under the contributory pension scheme emanating from the pool of savings contributed that can suffice to provide the minimum needed livelihood. The secondary data of all pension contributions and retirement benefits were retrieved from series of publications of PenCom from the years 2004 to 2022. The primary data population consists of 1316 retirees. EasyFit 5.6 Professional Software together with the Least Square Model, accumulation and annuity formulae was employed to analyse the secondary data and the responses from the respondents during survey. Arising from the data collected and the analysis carried out using the Consolidated Public Service Salary Structure, the level of comfort of low income retirees who spent 20 to 35 years in active service is nothing to write home about due to insufficient pension benefits as a result of the challenges investigated. The study recommends the implementation of minimum pension derived with requisite modalities of 20 years as the minimum qualifying length of service and only 10-year post retirement subsidy.

NIGERIA ECONOMIC GROWTH AND CAPITAL MARKET DEVELOPMENT: DOES CONTRIBUTORY PENSION SCHEME MATTER?

Whether the contributory pension scheme (CPS) has addressed the shortage of capital for investments, the challenge of full compliance with the system and the shortage of investment outlets spurred the interest to investigate the impact of the CPS on capital market development and economic growth from 2005 to 2021. Secondary data was adopted for this study, and the data were extracted from the National Pension Commission and world development indicators. The study employed the auto-regressive distribution lag (ARDL) model as an estimation technique. The empirical results show that among the proxies for gross domestic product, total pension fund asset (TPFA) was significant in both the short and long run, which showed that a 1% increase in TPFA would produce a 0.0028% increase in the GDP. Also, among the proxies for capital market development, total pension fund asset (TPFA) was significant in both the short and long run, which showed that a 1% increase in TPFA would produce a 0.024% increase in capital market development. Based on these findings, the study concluded that CPS influenced capital market development and economic growth. Consequently, this study recommended, among others, that the NPC should continue to partner with relevant stakeholders such as pension fund administrators and custodians by making its investment regulations more flexible and encouraging increased pension fund investments.

The New Contributory Pension Scheme and the Investment of Pension Fund for Improved Benefits

The study examined the new contributory pension scheme and the investment of pension fund for improved benefits. Descriptive statistics was used in analyzing the responses elicited through questionnaire, from the sampled population. Data gathered from in-depth interview were analyzed qualitatively in other to test the hypothesis. It was found that the investment of pension funds has not led to fair returns in retirees Retirement savings accounts (RSA) balance. The study suggests diversification of the portfolio and modes of investment of pension funds by the PFAs to include greater emphasis on the real estate and infrastructures, a part from government secured bonds. It is also suggested that Pen Com as the regulator should ensure adequate supervision of the activities of the PFAs so they can declare fair returns.

The Contributory Pension Scheme and Pensioners Satisfaction in Nigeria

The Contributory Pension Scheme and Pensioners Satisfaction in Nigeria

The Contributory Pension Scheme and Pensioners Satisfaction in Nigeria

The Contributory Pension Scheme and Pensioners Satisfaction in Nigeria

Contributory Pension Scheme and Insurance Industry’s Equity Investments in Nigeria

The paper explores the nexus between contributory pension and growth of the Nigerian insurance industry. Proxies for insurance industry growth were taken as direct premium generated and growth of its investments, especially equity investments. Given that equity investment was one of the prescribed investment outlets for insurance industry funds in Nigeria, authors hypothesized that the contributory pension Act of 2014 would spur rapid growth in equity investments of the industry for the period investigated. Ex-post facto research design was followed and data were drawn from the annual accounts and reports of National Insurance Commission, NAICOM, and publications of Pension Regulatory Commission, PENCOM, National Bureau of Statistics, NBC, and Central Bank of Nigeria, CBN, for the period, 2005-2015. Ordinary Least Square (OLS) was the estimation method, whereas techniques for data analysis included Multi-Regression model, t-test statistic, adjusted coefficient of determination and F-statistic. The result of the tests showed that contributory pension has positive and significant impact on the insurance industry’s equity investments (p<0.05). Clearly, reform of pension industry led to rapid increases in the equity investments of the insurance industry but limited only by statutory ceiling on equity investments and what sound prudence dictates.

CONTRIBUTORY PENSION SCHEME: PANACEA FOR RETIREMENT WOES IN NIGERIA

Pension management in Nigeria seems to have assumed a serious concern to the citizenry especially retirees. Over the years, funding has been the major challenge that successive government had had to grapple with. This creates avoidable problems to retirees especially, government employees, whose pension entitlements are delayed or not paid at all before they die. This resulted in the introduction of Contributary pension scheme in 2004. Part of the reason for introduction of the scheme is to resolve the issues of paucity of funds, fraud and other governance issues that dogged the Defined Benefit Scheme (Old Pension Scheme). The new scheme, Contributory Pension Scheme, is a flee from this malaise and allows workers in the formal sector to contribute to the scheme, through their salaries, while the employer contributes a stipulated percentage by law into the scheme’s treasury called. The Retirement Saving Account RSA). The essence is to reduce the financial burden of funding retirement process which was solely borne by the employers but now shared by both employers and employees in the new arrangement (CPS). This paper examined the objectives of the scheme, its benefits and challenges. The paper, however, concluded that the pension scheme is a robust, safe and dependable packaged for retirees. The paper, therefore recommended that, states, in collaboration with employers in the private sector should emphasize on the scheme to ameliorate the suffering of workers and eradicate poverty at retirement.

CONTRIBUTORY PENSION SCHEME ON NIGERIA ECONOMIC GROWTH

This study was embarked upon to provide empirical evidence on the effect of contributory pension scheme on economic growth in Nigeria. Data for the study were secondary sourced from various records of PenCom Annual Reports and CBN Bulletin (database). The data were computed with the use of Statistical Package for Social Sciences (SPSS). It was concluded that pension fund assets and pension contribution /savings mobilized over the years have positive and insignificant impact on economic growth. The implication of this finding is that the authorities concerned have not been able to use the pension fund asset and savings mobilized to boost economic growth in Nigeria. It was therefore recommended that, there should be more emphasis on the management of pension assets in the capital market as well as government bond, real estate and investment trust to boost Gross Domestic Product (GDP) of the country (Nigeria). Secondly, there should be prompt reconciliation between Pension Fund Administrators (PFAs) and Pension Fund Custodians. This will bring transparency and accountability to the system. Finally, PenCom should ensure effective monitoring, supervision and enforcement of the provision of the PRA 2004, which are the inevitable ingredients in the Contributory Pension Scheme towards Gross Domestic Product (GDP).