Pension Administration in Nigeria in the recent past has been very challenging. The present experience has shown the administration could be relied upon given that is has undergone a lot of reforms poised to make a difference from past experiences. The present PenCom Reform Act, 2004 is fashioned after the model in Chile. It is fully funded at all times; hence, there are no funding gabs. Where there seems to exist one, provision is made for correction within 90 days under PenCom supervision. Safety valves are installed. This is why the administration of pension assets is separated from custody. Furthermore, pension assets are not used as collateral. There is the need by PenCom to closely monitor the activities of Pension Fund Administrators to curtail signs of distress as experience in Latin America has shown that in Chile, where the model is copied from, the nation commenced contributory Pension scheme with 12 PFAs, graduated to 21 and presently only 6 PFAs are on ground either through mergers or acquisition. However, this does not suggest that the pension assets of contributors have gone underground. This is made possible as a result of the safety valves inbuilt into the system as administration function of the PFAs is separated from custody function of the Custodians. The research method adopted was by the use of both primary and secondary data. The primary sources comprised structured questionnaire and oral interviews administered on the respondents. The secondary data derived from textbooks, publications, newsletters and relevant websites. The research method adopted was by the use of both primary and secondary data. The primary sources comprised structured questionnaire and oral interviews administered on the respondents. The secondary data derived from textbooks, publications, newsletters and relevant websites. The hypotheses were tested with the aid of chi-square (x2), tables, simple percentages and ratio analysis.
The deduction arrived at the end of this study shows that:
(1) There is much improvement in the administration of pensions in the country now than in the immediate past especially in the public sector.
(2) Given close supervision, the system can weather any storm that may arise in the course of doing business.
(3) There is a steady growth in the Accounting Unit of all PFAs which suggest effectiveness and efficiency in management. Moreso, as the industry is competitive.

Meanwhile, the study recommends that there is the need for PenCom (The Regulatory Authority) to embark on a wide range of public enlightenment especially in the informal sector to encourage voluntary participation. Finally, for further studies, the need to establish a National Databank that would assist the various Regulatory Authorities (CBN, SEC, PENCOM, etc) in no small measure in the formulation and implementation of policies for economic growth.

Before their former colonies gained independence, the colonial powers in Africa (France, Britain, Spain and Portugal) introduced different models of social security systems to their respective colonies primarily as an extension of their own systems and essentially for the benefit of their respective expatriates working in the public sector in Africa. Later on, the same or different benefits were extended to African workers in the civil service, the industrial sector and urban cities initially as an incentive for a steady labour force and later as a way of satisfying the demands of labour unions. Unfortunately, the rest of the population was excluded. Former North Africa colonies with close proximity to Europe (Algeria, Egypt, Libya, Morocco and Tunisia had employment based pension schemes in places as early as the 1950s and subsequently, Algeria, Egypt and Tunisia expanded their benefits to include unemployment benefits and extended leverage to the self employed. However, former British colonies (such as Ghana, Nigeria, Kenya and Swaziland) initially focused more on providing benefits for work-related injuries through a worker’s compensation system. Not surprisingly, the first formalized social security legislation in Nigeria began with the workmen’s compensation Act of 1942 for the public and private sectors.

The first formalized public-sector pension legislation in Nigeria the pension ordinance was enacted in 1951, with retroactive effect from January, 1946. the pension ordinance was amended several times until the enactment of the Pension Decree No. 102 of 1979 (with retroactive effect from 1974) for federal civil servants and the Armed Forces Pension Decree No 103 of 1979 for the military. The two decrees established non-contributory Defined Benefit (DB) pension schemes based on final salary. Both schemes were funded from operating expenses on a pay-as-you-go basis, with the exception of federal parastatals. In 1997, the parastatals under federal ministers were permitted to make individual pension arrangements and appoint a Board Of Trustees (BOT) that administers the pension scheme (as specified in the Head of Service Standard Trust Deed and Rules) and decides on whether to maintain a self-insured pension scheme for their staff, transfer the management of the scheme to a third party pension fund manager or insure with an insurance company by paying a premium.

Remarkably however, the essence of the Pension Decree No. 102 of 1979 was preserved in subsequent federal pension laws for the public sector (including the Pension Act 1990, the Armed Forces Pension Act 1990, the police and other Agencies Pension Office Act, 1993 the police Pension Rights of Inspector General of Police Act 1993, and the insured schemes approved for federal parastatals) until the enactment of the Pension Reform Act 2004 on June 25, 2004. In general, the preserved features include gratuity, pension, disability and survival benefits; and retirement provisions based on normal retirement at age 60 or 35 years of service and early retirement with 10 – 34 years of service for reduced pension benefits.

In the private sector in Nigeria, the emergence of pension scheme for employees did not begin until 1954, when the Nigeria Breweries Limited established the first DB pension – and – gratuity scheme. The United Africa Company (UAU) followed with a similar scheme in 1957 (Femi O. Odulana, 2007). Four years later, Nigeria established a National Provident Fund as its first formalized social protection programme or employees in the private sector. Established in 1961, the National Provident Fund (NPF) was mostly a savings scheme. In addition, the NPF provided basic old age, disability, death and unemployment benefits (temporary unemployment) and it required equal employee and employer contributions of four naira (#4.00) per month.

However, the NPF saw only modest changes until it was replaced in 1993 with another social insurance scheme, the Nigeria Social Insurance Trust Fund (NSITF). Established by Decree No. 73 of 1993 of the Federal Government of Nigeria to provide retirement, disability, funeral and survivor benefits to employees (and their survivors in the event of death) in the private sector, the NSITF scheme is also a contributory, employment based, defined benefit pension scheme. The NSITF scheme, which took over the assets and liabilities of the defunct NPF, became operational on July 1, 1994. All registered members of the new scheme and their contributions were similarly transferred.

The NSITF scheme was amended in 2001 to increase the contribution rates and to change the basis for determining contributions and in 2002 to introduce a minimum pension benefit. Although the scheme made it mandatory for all employers and employees in the private sector to register with the NSITF, No-complaint or defiant employers, their directors and other principal officers were not aggressively prosecuted. Almost a decade after its implementation, 2004 the NSITF scheme was replaced with a more transparent, defined contribution pension scheme, commonly referred to as Contributory Pension Scheme....

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