The Role Of The Lagos State Pension Commission Accounting Essay

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Prior to the Pension Reform Act of 2004, the pension system in the Nigerian public service was characterized by many legislations and administration was through a centralized system. The new pension scheme is contributory and states can voluntarily have an equivalent scheme. The Lagos State Government, in March 2007, established the contributory pension scheme for all employees in the public service, local government council, tertiary institutions, and all State Government parastatals. The State established the Lagos State Pension Commission to administer the new scheme.

Pension is a fund set aside by an employee or an employer or both from earnings towards an employee's retirement (Cowdell, 2000). Pension reforms are a continuous process dictated by economic and political situations of a particular country. Pension scheme in almost every nation has undergone major changes in several nations (Ahmad, 2006). Pension issues have generated debates in the areas of funding, asset management, and disbursement of benefits. A pension scheme is either a defined contribution plan or a defined benefits plan. A defined contribution plan is a fixed contribution rate where the retirement benefit is variable and depends on the return on investment. The defined benefit plan sets a percentage of the final average salary and contribution varies according to the percentage of the average compensation received during the first three earning years of the beneficiary (Owojori, 2008).

Lagos State has the largest population in Nigeria, and is the largest employer in the country after the Federal Government. Therefore, Lagos State is viable for an assessment of the administration of the new pension scheme. Despite the reform, there are still some inherent problems and issues facing the Lagos state pensioners, and current employees.

This study assesses the role of Lagos State Pension Commission in the administration of the contributory pension scheme in Lagos State. The Lagos State Government enacted the Pension Reform Law in 2007 (PRL) as a response to the Federal Government's Pension Reform Act of 2004 to replace the Defined Benefit (Pay-As-You-Go) system with a contributory pension system. Lagos State was the first state to fully implement this scheme and the Lagos State Pension Commission (LASPEC) was established to oversee pension activities in Lagos State. LASPEC was established and empowered through an enabling Law to supervise and oversee activities of all pension activities in the State. The Commission also has regulatory powers to handle pension fund administration. Specifically, this research answers the question; What are the successes and challenges faced by LASPEC in the administration of the new pension scheme in Lagos State? This research seeks to identify the challenges of administering the contributory pension scheme in Lagos State. Information obtained from research would provide some solutions and directions on how to boost performance, trust, and increase participation in the new scheme.

The Lagos State Pension Commission

The Lagos State Pension Reform is in line with the Federal Government's pension reform, a departure from a non-contributory Pension Scheme. The Lagos State Pension Commission currently operates under an executive management as provided in the new State Pension Reform Law of 2007(PRL). The new scheme provides pension for all employees of the Lagos State government at all levels. The Lagos State Pension Commission (LASPEC) has the responsibility of handling all pension matters related to all public employees of the Lagos Government. LASPEC was established and empowered through an enabling Law to supervise and oversee activities of all pension offices in Lagos State. The Commission also has regulatory powers to handle pension fund administration. The PRL of 2007 expressly states the power of the Commission which ensures its adequate autonomy to act freely in the protection of the interests of both employers and employees. The PRL of 2007 expressly states the power of the Commission which ensures its adequate autonomy to act freely in the protection of the interests of both employers and employees.

In addition to a Secretary/Legal Officer, the Executive Management comprises four (4) specialised departments of the Commission for seamless operation and they are Technical, Administration, Inspectorate and Finance & Investment. The Technical department is responsible for the screening, registration, and all other activities of PFAs. The department also formulates standard requirements and procedure for processing of retirement benefits; it also designs and coordinates activities and operations towards issuance of Pension Redemption Bond (in respect of past benefits/accrued pension rights), including supportive background data for each bond issued. Additionally, the department is responsible for liaising with consultant actuaries and reviewing of actuarial reports for the Commission's adoption and implementation by the Lagos State Government, and with government agencies on operational matters related to pensions.

The Administration Department is responsible for the maintenance and management of the pension data bank; customer care which includes the establishment and maintenance of a Help Desk to attend to enquiries and complaints on all pension related matters; and public enlightenment on pension related issues among other things.

The Inspectorate audits pension related activities of Pension Fund Administrators (PFAs), transitional agencies, parastatals, and tertiary Institutions. It also receives and investigates complaints against PFAs, recommends and imposes penalties to be enforced for infractions by PFA's and MDA's in Lagos State in line with the provision of the LASG Pension Reform Act, 2007. The Inspectorate also liaises with PENCOM on Pension matters from time to time, especially on audit reports.

The Finance and Investment department implements financial policies and procedures; creates and maintains financial reporting and tracking system: initiates and prepares budget and revenue plans for the commission projects and corporate reporting; prepares financial reports; liaises with State treasury Office on matters relating to the contributory pension; ensures payment of appropriate penalties; reviews investment strategy of selected Pension Fund Administrators to be in accordance with PENCOM's guidelines on investment of pension funds.

The Legal Department is in charge of all legal issues and also keeps records and conducts the correspondence of the Commission. It also follows up on resolutions raised at Board meetings and performs all secretariat duties for the Board of the Commission.

The Contributory Pension Scheme (CPS) is mandatory for all employees with more than three years to their Statutory Retirement after its introduction. Moreover, the scheme is funded by the government and the employee, and pension funds are managed and paid by licensed Pension Fund Administrators (PFA). Also, the State Government currently deducts and remits pensions for employees captured on the State's Oracle Data Base. This comprise staff categorized as Active, that is, those working in the mainstream civil service, secondary school teachers, health workers, etc, State Universal Basic Education Board, Nigeria (SUBEB - primary school teachers) and LGA (Local Government Areas and Local Council Development Areas).

Additionally, the State Government has paid Accrued Pension Rights (Redemption Bond) in 3 (three) different batches: the first batch payment is N412,878,986.80 made to 103 retirees; the second batch of N887,362,600.56 made to 217 retirees and third batch payment of N3.5 billion made to 650 retirees.

Tables 1-5 below are the summaries of remittance made from inception, April 2007 to date:

Table 1: SCHEDULE OF REMITTANCE TO THE SIX PFAs FOR APR - DEC 2007

MONTH

EMPLOYEE'S CONTRIBUTION

(N)

EMPLOYER'S CONTRIBUTION

N

TOTAL

N

APR'07*

69,072,583.02

69,072,583.02

138,145,166.04

MAY'07

65,135,553.61

65,135,553.61

130,271,107.22

JUN'07

64,788,752.10

64,788,752.10

129,577,504.20

JUL'07

63,468,617.66

63,468,617.66

126,937,235.32

AUG'07

63,697,995.51

63,697,995.51

127,395,991.02

SEP'07

63,735,726.00

63,735,726.00

127,471,452.00

OCT'07

63,668,141.31

63,668,141.31

127,336,282.62

NOV'07

66,898,593.03

66,898,593.03

133,797,186.06

DEC'07

63,135,676.59

63,135,676.59

126,271,353.18

TOTAL

583,601,638.83

583,601,638.83

1,167,203,277.66

SOURCE: PENSION ADMINISTRATION DEPARTMENT, LASPEC

*Contributory Pension commenced in April 2007 in Lagos State

Table 1 depicts the equal monthly contributions of employees and employers from April 2007 to December 2007. The table has figures from April to December because contributions did not start until April 2007 after PRL was enacted and LASPEC began to operate. The figures show that both contributed over 60 million Naira every month totaling half a billion Naira and the total for the nine months was approximately 1.2 billion Naira. This was the amount remitted to the six PFAs contracted with LASPEC for investment on behalf of the employees.

Table 2: SCHEDULE OF REMITANCE TO THE SIX PFAs FOR JAN - DEC 2008

MONTH

EMPLOYEE'S CONTRIBUTION

(N)

EMPLOYER'S CONTRIBUTION

N

TOTAL

N

JAN'08

64,637,579.53

64,637,579.53

129,275,159.06

FEB'08

64,441,853.61

64,441,853.61

128,883,707.22

MAR'08

63,282,348.94

63,282,348.94

126,564,697.88

APR'08

62,967,217.57

62,967,217.57

125,934,435.14

MAY'08

63,303,113.00

63,303,113.00

126,606,226.00

JUN'08

63,629,878.05

63,629,878.05

127,259,756.10

JUL'08

64,194,696.37

64,194,696.37

128,389,392.74

AUG'08

64,130,460.21

64,130,460.21

128,260,920.42

SEP'08

64,996,545.25

64,996,545.25

129,993,090.50

OCT'08

65,256,746.73

65,256,746.73

130,513,493.46

NOV'08

65,300,157.01

65,300,157.01

130,600,314.02

DEC'08

65,270,199.41

65,270,199.41

130,540,398.82

TOTAL

771,410,795.68

771,410,795.68

1,542,821,591.36

SOURCE: PENSION ADMINISTRATION DEPARTMENT, LASPEC

Table 2 shows the monthly contribution by employees and their employers from January 2008 to December 2008. The total was approximately 770 million dollars for employees' contribution and the same for employers. Total contribution remitted to PFAs in 2008 was approximately 1.5 billion dollars. The difference between 2007 and 2008 could be attributed to the fact that 2007 contributions and remittance covered only 9 months while 2008 covered contributions for the whole of 2008 from January to December.

Table 3: SCHEDULE OF REMITTANCE TO THE SIX PFAs FOR JAN - DEC 2009

MONTH

NO. OF EMP

EMPLOYEE'S CONTRIBUTION

(N)

EMPLOYER'S CONTRIBUTION

(N)

TOTAL

(N)

JAN '09

101,100

242,285,093.12

242,285,093.12

484,570,186.24

FEB '09

101,501

242,963,893.12

242,963,893.12

485,927,786.24

MAR '09

101,654

243,664,643.14

243,664,643.14

487,329,286.28

APR'09

101,923

244,150,711.80

244,150,711.80

488,301,423.60

MAY'09

102,108

244,931,629.12

244,931,629.12

489,863,258.24

JUN'09

102,456

246,320,321.54

246,320,321.54

492,640,643.08

JUL'09

102,383

249,525,072.93

249,525,072.93

499,050,145.86

AUG'09

102,807

251,836,882.29

251,836,882.29

503,673,764.58

SEP'09

102,487

251,457,042.52

251,457,042.52

502,914,085.04

OCT'09

103,615

253,382,062.61

253,382,062.61

506,764,125.22

NOV'09

103,645

255,464,281.56

255,464,281.56

510,928,563.12

DEC'09

103,650

256,357,288.33

256,357,288.33

512,714,576.66

TOTAL

2,982,338,922.08

2,982,338,922.08

5,964,677,844.16

SOURCE: PENSION ADMINISTRATION DEPARTMENT, LASPEC

Table 3 shows the number of employees who participated in the pension scheme and the amount of contribution by these employees and their respective employers in 2009. The contributions are four times higher than the previous two years - 2007 and 2009. Over 100000 employees participated in each month with slight increase on the number of participants every month. There was also a constant increase in the contributions by both employees and employers which obviously was due to the increase in number of employees. The total amount of contribution by both employees and employers were close to half a billion Naira every month with a total of approximately 6 billion naira for the year 2009. This is a 500 percent increase in contribution from 2007 and 2008. The increase in contribution could be attributed to the increase in number of participants or new hires. LASPEC has reached out to institutions and both employers and employees have more confidence in the new scheme and the investment opportunities and participation thus increased.

Table 4: SCHEDULE OF REMITTANCE TO THE SIX PFAs FOR JAN - DEC, 2010

MONTH

NO. OF EMP

EMPLOYEE'S CONTRIBUTION

(N)

EMPLOYER'S CONTRIBUTION

(N)

TOTAL

(N)

JAN '10

102,708

258,887,671.67

258,887,671.67

517,775,343.34

FEB '10

102,769

261,628,708.17

261,628,708.17

523,257,416.34

MAR '10

102,830

264,369,744.67

264,369,744.67

528,739,489.34

APR'10

103,247

267,841,746.07

267,841,746.07

535,683,492.14

MAY'10

103,532

263,457,414.20

263,457,414.20

526,914,828.40

JUN'10

103,001

264,731,303.56

264,731,303.56

529,456,636.62

JUL'10

103,956

266,684,854.00

266,684,854.00

533,369,708.88

AUG'10

104,302

266,443,031.75

266,443,031.75

532,886,027.50

SEP'10

104,646

266,012,293.75

266,012,293.75

532,024,587.50

OCT'10

104,991

267,322,293.21

267,322,293.21

534,644,586.42

NOV'10

105, 001

267,331,101.01

267,331,101.01

534,662,202.02

DEC'10

105,018

267,431,178.37

267,431,178.37

354,862,356.74

TOTAL

3,182,141,340.43

3,182,141,340.43

6,184,276,675.24

SOURCE: PENSION ADMINISTRATION DEPARTMENT, LASPEC

Table 4 shows the monthly contribution by employees and their employers from January 2010 to December 2010, an increasing trend noticeable in every element of the table. There was a slight increase in the number of employees which also translated into the slight increase noted in both contributions from employees and from their employers respectively. The total amount remitted to PFAs also increased from the previous year, 2009.

Table 5: SCHEDULE OF REMITTANCE TO THE SIX PFAs FOR JAN - DEC, 2011

MONTH

NO. OF EMP

EMPLOYEE'S CONTRIBUTION

(N)

EMPLOYER'S CONTRIBUTION

(N)

TOTAL

(N)

JAN'11

104,563

270,528,512.70

270,528,512.70

541,161,588.40

FEB'11

105,939

386,014,189.69

386,014,189.69

772,134,318.38

MAR'11

105,550

383,944,263.51

383,944,263.51

767,994,077.02

APR'11

105,434

382,860,568.60

382,860,568.60

765,826,571.20

MAY'11

104,722

380,582,794.17

380,582,794.17

761,270,310.34

JUN'11

104,523

379,625,816.46

379,625,816.46

759,356,155.92

JUL'11

104,170

382,040,990.95

382,040,990.95

764,186,151.90

AUG'11

106,526

388,708,146.74

388,708,146.74

777,416,293.40

SEP'11

105,519

385,650,331.31

385,650,331.31

771,300,662.62

OCT'11

104,526

382,592,515.87

382,592,515.87

765,185,031.32

NOV'11

104,565

382,768,048.45

382,768,048.45

765,536,096.90

DEC'11

104,383

383,375,249.20

383,375,249.20

766,750,498.30

TOTAL

4,488,691,427.65

4,488,691,427.65

8,978,117,755.70

SOURCE: PENSION ADMINISTRATION DEPARTMENT, LASPEC

Table 5 shows an increase of almost 2000 more employees in the first 2 months of 2011 compared to the previous year, 2010. The increase is also reflected obviously in the contributions from both the employees and their employers. However, contributions reduced again from May to July 2011 which caused a reduction in monetary contributions from employees and their employers. The number of participants again increased in July, but went down in September. It went down even further from October to December 2011. This decrease in the number of participants did not however reflect on the amount of money contributed by employees and their employers. Surprisingly, the total contribution for 2011 was over 2 billion-Naira higher than the year 2010. This study would investigate the reasons for the fluctuations and try to explain if the increase is due to the effectiveness of LASPEC in the administration of the Pension Scheme in Lagos.

Table 6: CONTRIBUTORY PENSION SUMMARY REPORT

PFA

NO LASG CONTRIBUTORS

REMITTANCE AS @ DEC. 2012

TOTAL NO RETIREES

REMITTANCE TILL DATE

ARM

 

3,467,937,181.95

274

3,543,520,853.27

CRU

 

7,053,874,701.34

562

7,192,329,717.50

IBTC

 

17,103,659,409.17

1162

17,463,916,643.19

LEADWAY

 

2,132,940,723.98

106

2,172,603,163.96

NLPC

 

4,880,178,554.13

289

4,978,406,729.59

TRUST

 

2,573,841,954.28

214

2,624,772,566.38

 

94,716

37,212,432,524.85

2607

37,975,549,673.89

SOURCE: PENSION ADMINISTRATION DEPARTMENT, LASPEC

Table 6 above shows the summary of contributions. Column I shows the list of PFAs and Column III shows that over 37 million naira was remitted to retirees as of December 2012 while the current remittance as of March 31, 2013 is close to 38 million naira. This shows an increase in the amount of payments to retirees in Lagos State.

The Lagos State Contributory Pension Scheme

The PRA of 2004 empowers State Governments to establish the Contributory Pension Scheme. The Lagos State Pension Commission (LASPEC has a part-time Chairman, a Director General (DG), four (4) full-time Commissioners and, eleven (11) part-time members representing stakeholders in the State's pension industry (LASPEC, 2011).

Similar to the National Pension Commission (PenCom) under PRA, PRL authorizes the Lagos State Pension Commission (LASPEC) to regulate, supervise, and ensure the effective administration of pension matters for public service employees. LASPEC stores employees and retirees information in a designated data bank. The management currently includes: the Civil Service Pensions Service; the Local Government Staff Pensions Board, and Teachers Establishment and Pensions Office. These three departments oversee issues of existing pensioners and would cease to exist after the last pensioner dies.

Contributory Pension Scheme (CPS) was introduced in Nigeria in July 2004 to replace the old Defined Benefit (Pay-As-You-Go) system. Lagos State was the pioneer state government to fully implement the scheme in Nigeria. The silent idea behind the embracement of the new pension system by Lagos State Government is to give a new lease of life to the fate of workers in the State. Hence, the establishment of Lagos State Pension Commission by the State Government through the Acts of Parliament

Background to Project and Method

This research is one of the four types of program evaluation; process, outcome, impact and; cost-benefit or cost effectiveness. Process evaluation is conducted to assess whether a program conforms to the requirements and design of the program, in addition to meeting customer or client expectations. Outcome evaluation, on the other hand, uses the outputs of the program to determine its effectiveness while impact evaluation, a type of outcome evaluation, compares program outcomes with what would have happened without the intervention program. The fourth type of evaluation is the cost-benefit or cost-effectiveness analysis, which compares programs outputs or outcomes with the costs of establishing and operating the programs (Olonilua & Ibitayo, 2011). This study is a process evaluation being conducted to assess whether the new pension scheme in Lagos is meeting the requirements and the design of the scheme in addition to meeting employers and employees' expectations.

There is a dearth of information available on the administration of the contributory pension scheme in Nigeria. Available research has been on the elements of the contributory pension scheme but no research has assessed the implementation of the new scheme as it relates to its administration by the various entities designated to disburse the pension funds. While some literature has identified funded pensions to increase national saving and develop capital markets, they have also pointed towards various barriers that hinder achieving these objectives in low-income countries. This literature has not been able to offer support for funded pensions in the context of developing countries with a GDP as low as that of Nigeria.

The Lagos State Pension Commission has made significant payments to beneficiaries since its inception. Presently, the Lagos State Government (LASG) pays monthly pensions to pensioners who retired under the old Scheme (PAYG). The PAYG Scheme covers the pre PRA 2007 pensioners and those exempted by the Act. The Transitional Pension Departments (as provided by the Law) and other various Government Ministries, Departments and Agencies handle this responsibility.

The main objective of this study is to evaluate the effectiveness of the Lagos State Pension Commission (LASPEC) in the administration of contributory pension scheme under PRL 2007.This study identifies the successes and challenges of implementing the new contributory pension scheme in Lagos State by LASPEC. Results from this study provide a model and new guidelines to various levels of government in Nigeria on how to improve the implementation of the new Act. The research objectives for this research are:

To investigate the challenges of administering the new scheme in Lagos State.

To compare the challenges in the state with the challenges at the national level.

Findings

Using face-to-face interviews and review of documents , the findings of this study show that the implementation of CPS has recorded significant success in Lagos State, attributable mainly to the unequal support it continues to receive from the State Government and the professionally run execution platform - i.e. LASPEC. However, the new Pension Scheme is still faced with several challenges as enumerated below:

The importance of Lagos State Government's support to the continued success of the CPS in the State cannot be overemphasized is very important for the scheme to be effective. The timely deduction and remittance of the employees and Government portion into the contributors Retirement Saving Accounts is the pillar that holds the new Scheme and must be maintained.

Additionally, there are still instances when contributions for certain months or streams are delayed. The Scheme is also faced with the challenge of non-remittance of Redemption Bond contributions created for the funding of old pension liabilities. There is still unending discussions around the obvious gap between existing accrued pension liabilities of the State Government and the statutory 5% Redemption Bond Provision being set aside on a monthly basis. Available facts have showed that the statutory 5% of total monthly employees' emolument is grossly inadequate in funding the maturing pension liabilities of the State. Also, the unavailability of an accurate Actuarial Valuation of the exact pension liability of the State Government under the old scheme is a big challenge; without which it will be very difficult or impossible to ascertain the exact Government liability.

The efficiency of the Scheme is still impaired by the problem of slow and long approval process of National Pension Commission (PENSION). The National Pension Commission does not have the capacity and resources to gather and manage these amount of data required. Some of the data requirement are to take stock of working and jobless population, identify the number of ghost workers, identify those entitled to benefits but not receiving them, quantify the value of unpaid pension and accrued rights, develop the baseline for workforce and hiring criteria, identify past service records, and develop an appropriate information system. To compound this problem is the fact that the NSITF has compliance problem and have stations not connected by the wide area network (WAN).

There are no clear cut route to securing PENSION's approval on critical pension matters as it affects the Commission and our retirees. These issues include remittances that cannot be applied by the PFA (unapplied fund), wrong remittances of contributions, PFAs transfer window etc. The delay from PENCOM's end continues to negatively impact the efficiency of the new Scheme in the State. Among the challenges is also the problem of non-compliance by some ministries, department and agencies of the State Government (MDAs). The reason for their default is primarily due to unavailability of fund for the huge arrears. Other challenges include the questionable skills and competences of Pension Fund Administrators and the credibility of both PFAs and PFCs.

These findings are consistent with an early evaluation of the status of PRA at the national level by Dostal (2010a) which showed that the reform has not improved the social security for older citizens employed in the informal sector and some employees may experience problems. Through a model calculation, administration of pension funds by PFAs has shown negative returns for participants and the institutional design of the pension system may not be appropriate for the scheme (Dostal, 2010a). And actual management of the pension system through PenCom has weak compliance regulatory enforcement.

The new scheme is viewed to be biased towards the younger generation while the older people have to rely on informal provisions to survive their old age. Dostal (2010a) opined that the PRA of 2004 did not expand the scope of pension provisions when compared to existing pension schemes prior to 2004. The Retirement Savings Account performed below the pre-reform level when it was only able to reach 3.5 million registrations in the first quarter of 2009. This has been attributed to the longer time it took states and local governments to enact similar reforms. Additionally, private sector employers were reluctant to join the reform because they doubt the credibility of the new pension scheme (Dostal, 2010b). Noteworthy also is the fact the international financial institutions such as International Monetary Fund (IMF) and World Bank did not offer significant support for the Pension Reform Act of 2004.

Some of the problems associated with the new pension scheme are categorized as institutional capabilities, and individual saver's interests. Under institutional capabilities, Dostal (2010a) identified limited regulatory capability, poor data gathering and management, instability of the banking system, political interference with investment decisions, limit in the number of asset classes available for investment, high transition costs in moving from old unfunded DB system and PAYGO system to funded pensions. Under the individual saver's interests, Dostal (2010a) identified the following: doubtful credibility of future pension promises, inadequate returns on low-yielding assets, high management charges questions , high rate of inflation questions returns, and frequent change in labour market status questions build-up of significant sums in individual accounts.

According to Dostal (2010b), the Nigerian government no longer follows the Chilean model and debate is shifting on how contributed savings could be used for productive investment. Suggestions are being made towards finding alternative future investment opportunities using pension savings and not direct government investment. The role of Pension Fund Administrators (PFAs) is questionable since participants in the pension scheme cannot get clear information on their investment strategy. Some PFA websites have not been updated in two years and they fail to publish the rate of their RSA funds at the end of each financial year, 14 out of 26 PFAs provided recent information on their website (Dostal, 2010b). There is also the problem with the credibility of the banking system, stock market, and macroeconomic performance of how the economy interacts with funded pension scheme. There is the lack of regulatory control of the financial markets which might interfere with the interests of the pension fund savers in various ways. The safety of investments also poses an issue for the saver due to banking crisis and of course, the Nigerian Stock Exchange has fallen by more than two thirds. This leaves only the Federal government bond as the only safe investment class for the pension system.

Dostal (2010b) argues that none of the original goals of the PRA of 2004 has been achieved. The Federal government still owes arrears from previous pension schemes reaching record highs. Also, the newly funded scheme has not significantly impacted the development of financial markets since most of the assets are held in government securities and domestic bank money instruments, and finally, the macroeconomic credibility of Nigeria has declined due to issues such as the parceling off of oil income into special funds. The regulatory environment of the Country did not encourage interaction between pension reform and economic reform rather the problems of regulation within the new system has led to lack of credibility for the new scheme (Dostal, 2010b).

Casey (2011) however opined that recent events do not mean that the PRA of 2004 has failed. The author refers to funded pension schemes all over the world and that Nigeria is not singled out, other funded pension schemes have also experienced major losses caused by crash in equity markets and those retiring when the market is a low point are more likely to experience lasting damage. The Nigerian government is exploring other uses of the contribution due to limited investment base. One option is to establish a kind of infrastructure fund which allows pension funds to be invested directly into activities that promote development by issuing long-term bonds. Private sectors can also serve as infrastructure providers by financing their investments through long-term bonds.

An amendment was made to the PRA of 2004 known as the Pension Reform (Amendment) Act of 2011. The amendment basically exempts members of the Armed Forces, Intelligence and Secret Services from the application of the new pension scheme. The amendment signed into law on April 7, 2011.

Recommendations

Government can mandate participation by monitoring the number of employees in an organization so that all qualified employers participate in the new pension scheme.

There is need for continuous regulation and strengthening of the institutional structure of the new scheme. The PFAs should be evaluated periodically and supervised by Pension Commissions such as LASPEC to ensure compliance. The culture of providing monthly statements of accounts and online access to contributors should be imbibed to ensure accountability and transparent.

There is the need for more research on how to set up independent central data management authority on how to find solutions to issues such as setting hiring criteria, developing baseline for workforce, and basic registration system among other things. Some service and membership records would need to be revalidated. There may be need to outsource some of the responsibilities and develop appropriate method of information technology.

There is the need for a more effective way of coordinating activities among the various governments and agencies. It is also very important to secure the support of successive governments in Lagos State to ensure the continued success of the CPS.

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