THE EFFECTIVENESS OF PENSION ADMINISTRATION IN NIGERIA AS IT RELATES TO PENSION REFORM ACT, 2004.

THE EFFECTIVENESS OF PENSION ADMINISTRATION IN NIGERIA AS IT RELATES TO PENSION REFORM ACT, 2004.

ABSTRACT

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.