This study seeks to evaluate whether or not the Contributory Pension Scheme has an impact on employee retirement benefits of quoted firms in Nigeria and; to determine the relationship that exists between the Impact of the Contributory Pension Scheme on employee retirement benefits and standard of living in Nigeria. The study also assessed the relationship between pension costs and independent variables: total assets and profitability of quoted firms in Nigeria. In line with the objectives, three hypotheses were formulated. The population of the study is the one hundred and eighty-two (182) firms quoted on the first- tier market of the Nigerian Stock Exchange and ten (10) quoted firms selected as sample size based on judgmental sampling. The study utilized data from secondary source. Data were obtained from the annual accounts and reports of the (10) quoted firms that made up the sample of the study and the World Bank data profile on gross national income per capita in Nigeria. The time frame for the study is ten years, covering the period of 1998 to 2007. The techniques of analysis used in the study were the Student’s T-test, qualitative grading, the Pearson Correlation Coefficient and Multiple Regression Analysis. We concluded that even though the Contributory Pension Scheme has positive impact on employee retirement benefits of quoted firms in Nigeria, variation in application still exists among them. The study also established that the ability of quoted firms to fund their pension assets has direct relationship with their assets sizes and respective profitability. The study recommended an effective monitoring/supervision and enforcement of the provisions of the Pension Reform Act, 2004, in addition to effective implementation of the penalties provided by the Act on non-compliers regardless of their status or origin. The study calls on the appropriate authorities such as the government, professional accountancy bodies on academics to commission research and activities geared towards developing not only accounting policies that would ensure swift compliance with Statement of Accounting Standards (SAS 8), but strategies that would ensure optimum investments that enhance net worth and profitability of firms.

Pension as a scheme is designed to cater for the welfare of the pensionable retired workers both in the public and private sectors. The working lives of employees move continuously towards a certain direction that is, from employment, to grow, to retirement, some are fortunate to save enough money to take them through the retirement period; while a majority leaves the service with little or no savings at all. Ideally, there, governments and organizations need to identify a way of accommodating and adequately rewarding employees’ past efforts through organized pension plans, so that it can achieve the goals of their existence (Rabelo, 2002). Essentially, this is often thought different retirement policies which include the Defined Benefit (pay-as-you-go) Scheme, the National Provident Fund Scheme and in particular the new Contributory Pension Scheme that is expected to be fully funded.

However, some of the existing Pension Schemes seem inadequate and/or ineffective. In Nigeria, for instance, Statement of Accounting Standards number 8 (SAS 8) was issued in 1991 to direct and guide businesses on the determination and reporting of pension and retirement benefits. Its growing tribute, however, emerges from divergent schools of thought namely, the contributory, the noncontributory and the hybrid schools of thought (Kantudu, 2005). The first school of thought, emphasizing on contribution, is advocated by most accounting standards setting bodies as well as by writers (Campbell and Feldstein, 2001). These scholars argued that should the employees contribute a certain percentage to the plan the employee will be able to receive the entire or part of the benefits at retirement, or in case of termination of appointment or dismissal. The hallmark of the contributory theory is operational efficiency in computation and funding.

The second school of thought (the non contributory) also advocated by some accounting setting bodies (McGill, 1984; and Byrne, 2003). According to the school, employers alone should fund the pension asset. The belief of this school was that the singular funding made by the sponsor encourages and attracts more qualified and dedicated employees into the organization. Under this arrangement, the benefit is defined by a formula, and pension at retirement is paid either as a lump sum amount or as a life annuity (SAS 8, 1991). In between the two extremes lies another school – the hybrid, with the view that on an aggregate basis, the active working employees of the firm should always provide the funds for the firms’ pensioners (Feldstein, 1996). In other words, companies should pay pensioners out of the company’s cash flow (Hendriksen and Van Breda, 1992). This is because the cash flows generated are as a result of the employees’ efforts and contributions, and hence they deserved a share of it especially now that they are unproductive. But an apparent limitation of this argument is that it can only hold if current employees are not out numbered by pensioners (Klumpes and McCrae, 1999).

Pension Accounting has also been subjected to further controversies and criticisms particularly in the area of actuarial valuation methods to be used in computing pension costs. The result has been the emergence of two schools of thought. Hagerman and Zmijewski (1979); Bowen (1981); Daley and Vigeland (1983); and Ghicas (1990) contended that the prescription of one best method which posters comparability among annual accounts of firms and one that eliminated chances of earnings management by firms at the detriment of the pensioners, should be the goal of pension standards. This school argued that the laxity which must pension standards allow in the selection and application of actuarial valuation methods must often than not gives firms an advantage to reduce pension liability, and hence pension contribution, which by extension increases their earnings per share and executive compensation. For instance, a study by Gopalakrishnan and Sugrue (1995) revealed that a 1% increase in discount rate will lower the pension liability by about 20%.

The other school of thought argued that firms should be allowed to switch actuarial valuation methods, because whatever they do will be in the best interest of the firms and other stakeholders. What is important, according to this school of thought, is that voluntary application of the requirements of the standards would be affected by political visibility of making the disclosure and the proprietary costs associated with application (Ghicas, 1990; Klumpes and McCrea, 1999; Klumpes and Manson, 2000). Consequently, Pension has in recent times increasingly attracted the attention of policy makers in many countries as a means of facilitating privately funded retirement income savings by an ageing workforce (World Bank, 1994).

Pension has been defined in various ways viz: Uzoma (1987) is of the view that Pension is a series of regular payment provided by a former employer to a retired employee. Also, pension is basically a human affair that employees are expected to enjoy a retirement benefit that corresponds with the amount of commitment they have investe in the achievement of the profit maximization or service oriented goals of the organization or government (Bunmi and Obaro, 2007). Furthermore, paragraph 9, Statement of Accounting Standards (SAS. 8) states that pension involves an agreement between employers and employees upon attainment of a specified retirement age.

In the same vain, Ako (2006) views a pension system as essentially an income security program which provides benefits to beneficiaries who may be retirees, pensioners or the destitute. However, the establishment of different Pension Schemes in Nigeria did not achieve their aim, these were characterized by many problems that really constituted a set back for the scheme. These include non-availability of records, uncoordinated administration, inadequate funding, out right fraud, irregularities and conflicting laws, diversion of remitted or allocated fund, presence of ineligible pensioners on the pension’s payroll, and incapacity to effectively implement its budget and make adequate provisions. This has given rise to untold hardship faced by retired workers, for example frustration, lack of sustenance, health problems and in some cases death.

Therefore, the gross in adequacies and mismanagement of the most of our adopted pension policies with their attendant frustrating effects on the sustenance of both the retired workers and the economy at large has often call for their constant review in Nigeria as obtains in other part of the world. Pension Schemes exist to provide post-retirement benefits to employees. Pension Scheme was introduced into Nigeria during the colonial era to provide old age income and security to British citizens working in the country upon retirement. All along, and until very recently, Nigeria embraced and adopted the traditional Defined-Benefits (D-B) plan that has failed to yield the desired benefits for most workers and several economies where it has been adopted. The

Defined-Benefits (D-B) plan, which usually specifies the entitlements of workers after a minimum qualifying year of service, has lost favour with most countries, including the most developed countries of Europe and North America. In fact, Ambachtsheer (2007) noted that many corporate employers are abandoning their traditional Defined-benefit plans, while many of the Defined Benefits plans that remain are financially important to offset the huge indebtedness.

Thus, it is imperative that the privilege of receiving gratuity and pension appears the greatest manifestation of the victory of labour in his fight with the employer over his exploitation after several years of productive services. Hence, pension reform became necessary as a result of the malady which ravaged Pension Schemes through the activities of the old Pension Board. With the bad administration of Pension Schemes in Nigeria, the hope of the pensioner became bleak, as many verification exercises were embarked by old Pension Board to mock the pathetic pensioners. This eventually escalated their agony as their labour became in vain. Many of these pensioners lost their lives as a result of these exercises which do not yield any good dividend. Indeed, today people have resorted to self-help to secure their life in retirement. Thus fueling corruption and other vices (Fanimo et al, 2007).

Pension Scheme which was meant to provide for old age when one has retired from service has turned out to become a burden on the people and the government. These Nigerian workers who have worked tirelessly for the growth and development of the country will end up passing through many hurdles to get their retirement benefits. It should be noted that the Federal Government still owes pension obligation areas in excess of N2 trillion national pension deficits as at 12004 and 216,000 retirees from the Federal public service being owed a whopping N56 billion retirement benefit (Moddibo 2007).

From the foregoing, in order to reposition and refocus the Nigeria Pension Scheme to be alive to its responsibility and to address some of the problems associated with Pension Schemes in Nigeria. The Federal Government signed into law the Pension Reform Act 2004 which introduced the New Contributory Pension Scheme and it covers employees in the public sector, the Federal Capital Territory and the private sector.

The Pension Act repeals all previous legislations regulating the administration of pension benefits in Nigeria. The Pension Reform Act, 2004 appears to be a neoliberal piece of legislation which ideas are relevant in explaining the evolution and development of pension system in Nigeria (Aborisade, 2008). With the virtual collapse of the African Welfare System, the new Pension Act attempts to have as its primary objective, the encouragement of savings among employees so that in retirement they are not impoverished and the establishment of a uniform set of rules regulations and standards in the public and private sectors of the Nigerian economy on matters of pensions. Fundamentally, the Pension Reform was designed at ensuring that all employees receive their entitlements as and when due, assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age. The question remains, what is the impact of the application of the Contributory Pension scheme on employee retirement benefits and standard of living. In the same vein, the new Contributory Pension Scheme will save the economy much of its heavy debt burdens inherited from previous schemes, facilitate adequate funding of employers pension pans, create enhanced opportunity for the citizens in all works of life, add more value to the final entitlements of workers, promote the development of capital markets, foster investment opportunities; promote national savings and, macroeconomic development (Pension Reform Act, 2004).....

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