Effect On The Welfare Of Retirees Accounting Essay

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Life after retirement is one of the most dreadful periods for workers in Nigeria. The fear of facing the future after retirement creates an ambiance of disturb among employees (Editorial, 2009:1). Retirement is seen by workers as a transition that could lead to physiological and economical problem ( Ogunbameru and Bamiwuye, 2004). The provoking thoughts of facing uncertain future after retirement by workers is responsible for most bureaucratic corruption (Agba, Ikho and Ushie, 2008) and could also be responsible for low commitment to work by employees and service ineffectiveness of vital institutions in Nigeria, lack of adequate social welfare for the aged (Awiosika, 2009), huge deficit, arbitrary increase in salaries or wages, poor administration of retirement benefits (Ikeji, C.C. et al, 2011). Over the past three decades, the living conditions of pensioners in Nigeria had deteriorated due to the erosions of their economic power, changes in family structures and roles and unsustainability of the pension scheme and inability of government to fulfil her expected role in the care and support of pensioners in the country (Ajiboye, 2011). Pensioners are regarded as vulnerable groups, hence it has been accepted that pensioners are in dare need of government attention. This is because poverty ravage this class of people than any other categories of people in Nigeria ( Ajiboye, 2011). Various efforts by various successive regimes in the country at addressing the needs of pensioners in the society have proven abortive. For instance, pensions of public servants in Nigeria that is supposed to serve as means of sustenance in their old age were poorly handled by Nigerian government and its corrupt officials. Due to these backdrop effects, the Pension Reform Act of 2004 was instigated by former president Olusegun Obasanjo led administration in 2004 ( Aderinokun and Adoba, (2004), National Pension Commission, 2008). The reform is contributory in nature with the intent of ensuring that every person who has worked in either the public or private sectors receives his or her retirement benefit as in when due. The reform was to serve as social welfare scheme for the aged by ensuring that workers save to cater for their livelihood during old age (National Pension Commission, (2005), Sule, 2009).

Seven years after the establishment of the new Pension Act, there is still speculation among Nigerians about the success of the Scheme. Whether the new Pension Act will be able to address the numerous problems associated with retirement scheme of the past. Specifically, some have asked whether the contributory pension act of 2004 would be able to address the problems of corruption, poor administration of pension fund, poor monitoring, evaluation and supervision of pension fund that usually characterized pension schemes in Nigeria (Casay, H.B., 2009). Consequently, workers often ask whether they would ever have financial security after retirement, what is the fate of their children and household after retirement? These questions among others occupied the minds of workers in Nigeria and could be responsible for workers negative attitude towards retirement, low commitment to work as well as high labour turn over (Oriofowomo ,A.O., 2006). This study will therefore go to the field directly to investigate the effects of the Pension Reform Act of 2004 on the welfare of retirees in Nigeria. This research will depend on both the primary and secondary sources for it investigation. At the end of this research, the researcher shall bring out his findings, also will make possible recommendations and also draw out a conclusion for this research.


This research will aim at understanding the concept of pension and the new pension scheme introduced by former president Olusegun Obasanjo administration. However, the objectives or aims of this research are to:

1. To verify if there is a significant difference between the new and old pension scheme.

2. To verify if there is positive effect on the welfare of the retirees under the new pension scheme.

3. To verify if there is difference in the administration of pension funds in the new pension scheme compare to the old one.

4. To verify if the new pension scheme has indeed addresses the failures of the old pension scheme.

5. To verify if there is transparency and efficiency in the management of pension funds.


Pension as good as it is, has lacked proper attention over the years and have been bedevilled with many problems. The administration of pension scheme has been generally weak, inefficient and non-transparent. The problem of poor administration has caused many pensioners to become destitute without means of sustenance (Fashanu, .I.K, 2012).

The problems of delayed and irregular payment of the pension benefits have led to many health hazards in the lives of many pensioners. Many have been reported to have collapsed and died while on queue to get their stipends. Many of them who were not able to build from one house before retirement are often seen driven from one house to another because they are not able to pay their rent. Many of them are no longer able to fulfil their obligation both to their families and to the society at large. Almost all pensioners were dejected and often looking like people without hope for the next day (Fashanu .I.K, 2012).

Another major pitfall of the pension's benefits is the fact that before the Pension Reform Act in 2004, the public sector operated largely the defined benefit pay-as-you-go (PAYG) Scheme, which depended on budgetary provision from the various tiers of government for funding. The budgetary provision was untimely and inadequate. This had made the scheme unsustainable. The situation was worsened by increases in salaries and pension from 16.7% to 30% between 1995 and 1990 (Urhoghide R.O, and Ogiedu K.S., 2008).

The private sector scheme was also characterized by very low compliance ratio to lack of effective regulation and supervision of the system. (Urhoghide R.O, and Ogiedu K.S., 2008).

The inadequate budget allocation has caused most pension scheme in the sector to be poorly funded or unfunded. The budget release which seldom come on schedule were for short of due benefits. This situation and resulted into unprecedented and unsustainable outstanding pension deficits estimate at over ₦2 trillion before the commencement of the Pension Reform Act of 2004. Again, there was no authenticated list data on pensioners, while about fourteen (14) documents were required to file pension claims (Edo State Pension Board of Nigeria, 2009).

There was also problem of the restrictive and sharp practices in the investment and management of pension fund which worsened the problem of pension liabilities to the extent that pensioner were dying on a verification queues and most of the over 300 institutions to fund the scheme were bankrupted before the new scheme came on board (Urhoghide R.O, and Ogiedu K.S., 2008).

In the private sector, most employees in the formal establishment and all those engaged in the informal enterprises were not covered by any form of retirement benefit arrangement ( kolawole, 2010)

Again, the scheme being unfunded gave no room or opportunity for accumulation of investible funds (Balogun, 2006).


For the purpose of this research work to be carried out, the following research questions shall be derived:

(RQ1) Is there any significant different between the old and new pension scheme?

(RQ2). Is there any positive effect of the new pension scheme on the welfare of the retiree?

(RQ3). Is there transparency and efficiency in the management of pension funds in the new pension scheme?

(RQ4). Has the new pension scheme been able to address the failures of the old pension scheme?


For the purpose of this research, two hypotheses will be used to find a tentative answer to the research verification. The Chi-square will be used to verify the validity of our hypotheses.


Theory is: "a plan or scheme existing in the mind only, but based on principles verifiable by experiment or observation" (Funk & Wagnalls, 1987).

The theoretical frame work intended to be use for the purpose of this research is the Organisational Behaviour theory. According to Daft, (2004), "Organizations are social entities that are goal-oriented; are designed as deliberately structured and coordinated activity systems, and are linked to the external environment". Organization theory: is the set of propositions (body of knowledge) stemming from a definable field of study which can be termed organizations science (Kast & Rosenzweig, 1970).

The study of organizations is an applied science because the resulting knowledge is relevant to problem solving or decision making in on-going enterprises or institutions (Kast & Rosenzweig1970).

Organizational behaviour is a field of study that investigates the impact that individuals, groups and structures have on behaviour within an organization. It is an inter-disciplinary field that includes sociology, psychology, communication, and management; and it complements the academic studies of organizational theory (which is focused on organizational and intra-organizational topics) and human resource studies (which are more applied and business-oriented). It may also be referred to as organizational studies or organizational science. The field has its roots in industrial and organizational psychology (http://en.wikipedia.org/wiki/Organizational_behavior). However, the concern of this research will analytically investigate within the turbulent environment where most Nigerian public enterprises operate. This environment is characterized by rapid changing environment, which its political instability since 1966 in which the military junta dominated the political terrain occasionally punctuated by a short civilian interregnum. The Nigerian pension enterprise could not meet their set objectives due to the hostile turbulent environment where they operate for three decades. However, notwithstanding the turbulent environment as party explaining the inefficiency and ineffectiveness of the Nigerian pension system, in line with economic global trend, it is the opinion of the Nigerian policy makers that privatization of this enterprise might bring sanity of efficiency and effectiveness to the Nigerian pension (Adeleke I., 2011).


The methodology for this research will be based on both Primary and secondary sources of data for her investigation. The primary sources will include the use of questionnaire which will be sent to a reliable person to help distribute in Nigeria, and immediately after filling, will be sent back to me by post through DHL. If time will permit, the researcher intends to go to Nigeria for oral interview to meet some relevant personnel and retirees, but if time will not permit, the oral interview will be neglected. The secondary sources will include text books from various scholars, reliable Journals, Articles, internet information and any other information I can lay my hand upon, will be used as a secondary source.


This research will consist of five chapters as summarize bellow:-



This chapter will consist of an Introduction/Background to the study, Statement of the Problem, Research Question, Objective of the Study, Hypotheses of the study, significance of the study, Scope of the study, Limitations to the study and the definitions of terms.



This Chapter will consist of our Literature review from relevant Text books of different scholars, Journals, Articles, Internet and any other material we can lay our hands upon and our theoretical frame work that will be used to analyse our study.



This chapter will consist of our Research methodology. This chapter will explain how the researcher intends to carried out his research.



This chapter will consist of our Data presentation and data analyses. Definitely, there will be use of tables to analyse our research questions through our administered questionnaire.



This chapter will consist of our findings, summary, recommendation and our conclusion.


This research project will contribute tremendously to the already existing body of knowledge. It will increase the knowledge of students of Social and management Sciences, Development and Economic Studies and also students from various fields of studies and also, International Students who intend to embark on a similar research. This study will not only help to ameliorate pension problem in Nigeria but will also act as a guideline to implement meaningful policies through its recommendation. More so, this research will contribute meaningfully to the general public at large.

The project will also be useful to students who embark on this same research due to the fact that, this project can help them on their literature review and their recommendation as well. Through my recommendations, the government of Nigeria will be able to adopt a suitable public policy measures to leverage the welfare or retirees.












Research topic submission


Research proposal submission


Chapter 1& 2 begin

Distribution of Questionnaire

Return of questionnaire

Chapter 3 begins

Chapter 4&5 begins

Final Documentation & submission