CHALLENGES FACED BY RETIREES IN ACCESSING PENSION FUNDS
CHAPTER TWO
LITERATURE REVIEW AND THEORETICAL FRAMEWORK
2.2 Literature Review
2.2.1 Administration of Pension Scheme
For betterand in-depth understanding of “Administration of pension Scheme”, it is imperative to first of all look at the concepts of “Administration” and “Pension Scheme” separately before synthesizing it. Administration according to John (1960) in Paul (2013) is the determined action taken in pursuit of conscious purposes. It is the systematic ordering of affairs and the calculated uses of resources, aimed at making those things happen which we want to happen, and at the same time preventing developments that fail to square with our intentions.On the other hand, Pension scheme according to Tijjani(2007) can be seen as government plan or program in form of policy through which retirees or somebody else pays regular amount of money to enhance the state of his welfare.
Based on the scholar‟s definition above, when the administration failed to achieve those things we want to happen, and prevent those things we don‟t want to happen to happen, then the administration has failed. For example, if the administration of pension and gratuity in Adamawa State pension Board failed to provide welfare for the retirees in the State and did not prevent delay, under payment and the stoppage of the payment of pension and gratuity that fails to square with the intention of the pension administration, then the administration has failed. Indeed, the view of John (1960) in Paul (2013) seems to be a starry in this study, although his idea is not without weaknesses. For example, the scholar failed to recognize the fact that… “systematic ordering of affairs and resources to achieve those things that we want and preventing those things that fail to square with our intention” cannot be possible without effectiveness or well trained personnel. The glory of human resources in an organization, particularly in the area of administration is the man power that will enhance efficiency and effective performance that will lead to the achievement of the predetermined objective. Not only otherwise as in the view of the scholar.
However, when we harmonize the views of john (1960) and Tijjani (200) above, and the two concepts are being synthesized, we can say administration of pension scheme is a deliberate combination of material, financial and skilled human resources channeling toward the achievement of government policy or program aiming at providing the retirees or pensioners with the means of livelihood after leaving the service of his/her employer to boost his/her welfare.
In Nigeria, several pension schemes have been adopted and administered before the resent or new contributory scheme Act 2004 came up since independence. For example, Balogun (2006) as documented in Fapohunda (2013), affirms that Nigeria's first ever legislative instrument on pension matters was the Pension Ordinance of 1951 which took effect retroactively from 1st January, 1946. The National Provident Fund (NPF) Scheme was established in 1961 by an Act of Parliament to provide income loss protection for employees as required by the International Labour Organization (ILO) Social Security (Minimum Standards) Convention 102 of 1952. The NPF scheme however covered only employees in the private sectors, and the monthly contribution was 6% of basic salary, subject to a maximum of N8.00 to be contributed in equal proportion of N4.00 each by the employer and the employee. The NPF scheme was later converted to a limited social insurance scheme established by Decree No. 73 of 1993 and administered by the Nigeria Social Insurance Trust Fund (NSITF).
The NSITF was a defined benefits scheme covering employees in the private sector working for organisations with a minimum workforce of 5 employees. It catered for employees in the private sector of the economy with respect to loss of employment, income in old age, invalidity or death. The initial monthly contribution of members was 7.5% of basic salary, shared in the proportion of 2.5% by the employee, and 5% by the employer, Fapohunda (2013). In 2002 this was revised to 10% of gross salary (comprising basic salary, transport and housing allowances) shared in the proportion of 3.5% by the employee and 6.5% by the employer. The proportion of pension to salaries increased from 16.7 % to 30% between 1995 and 1999. The Local Government Pension Scheme was established by Military Fiat in 1977.
In 1979, the Civil Service Pension Scheme was established by the Basic Pension Decree 102 of 1979. In the public sector, (both civil and public services, statutory bodies), pensions were governed by the Pensions Act of 1979, later the Pensions Act of 1990 as amended by the Pensions Regulations of 1991. The Act provided for benefits in terms of gratuity and pension payments. Gratuity is a single, lump sum payment while pension is a periodic payment, normally on monthly basis for life (Olanrewaju, 2011). The scheme was a compulsory and noncontributory one, which created a right to monetary collection by public servants and an obligation on the part of government to make payment. Thus, the pension Act of 1990 as amended by Pension Regulation of 1991 has set a base for pension right to the retirees and contractual term between the retirees and the government of Nigeria including all levels of governments.
Commenting on the provisions of the Decree 102 of 1979, Uzoma (1993) notes that in the special case of the public scheme the office of Establishment and Pensions acts as the trustee and constitutes the rules of the scheme. The scheme was for all public servants at all levels of governments except those who were on temporary or contract employment. The compulsory retirement age for such workers was 60 years for both male and female workers except for high court Judges that was 65 years and 70 years for Justices of the Court of Appeal and the Supreme
Court. However, the earliest retirement age was put at 45 years provided the worker had put in 15 years of service or more. In the same 1979, the Armed Forces Pension Scheme was created through Decree 103 of 1979 with retroactive effect from April 1974. Similarly, in the same year the Armed Forces Pension Act No. 103 was enacted.
These Decrees remained the operative laws on Public servants and Military Pensions in Nigeria at all levels of governments until June 2004 though there were several government circulars and regulations issued to alter their provisions and implementations. For instance in 1992, the qualifying period for gratuity was reduced from ten to five years while for pension it was reduced from 15 to 10 years. In all there have been about eight (8) registered pension schemes in the country before 2004 which were largely unfunded, self-administered and uninsured. Prior to 2004 the pension scheme in operation was the Defined Benefit or Pay as You
Go (PAYG), which Adamawa State is still practicing up to date, which is the focus of this study.
2.2.2 Budgetary or Pay As You Go Pension Scheme
. Prior to 2004 the pension scheme in operation was the Defined Benefit or Pay as You Go (PAYG). The government funded the public sector scheme hundred percent and it was a non contributory pension scheme. Chilekezi (2005) observes that the pension payment was done through budgetary allocations for each fiscal year. The private sector scheme seemed better organized than the public sector and as Uzoma (l993) affirms, it was mostly a contributory scheme, but in a few cases it was maintained as a non-contributory scheme 100% funded by the employers.
However, Prior to Pension Reform Act 2004, the budgetary pension schemes in Nigeria had been bedeviled and marred by many problems over time. The annual budgetary allocation for pension benefits was often one of the most vulnerable items in budget implementation in the light of resource constraints. In many cases, inadequate and untimely release of funds resulted in delays and huge pension deficit exacerbated by bureaucratic bottle-neck ravage the scheme. The administration of the scheme was weak, inefficient and non-transparent. There was no authentic list or data base for pensioners, whereas stringent procedures were required to process pension claims where documentation is haphazardly maintained. Similarly, sharp practices in management of pension funds exaggerated the problem of pension liabilities to the extent that pensioners, due to poor condition of their health status, were slumping and/or dying of hunger and in poverty, (Olurankinse and Adetula, 2010). The case in Adamawa State is now worse off.
Retirees and their families were subjected to ridicule and unbearable conditions as they could not enlarge and meet their social needs.Pension Reform Act 2004 was initiated to put an end to abject poverty to which many pensioners experienced as a result of the failure of government and bureaucrats to honour the pension obligations regularly as provided in the 1979 Pension Reform
Act, Ejikeme (2014). Unfortunately, all the evils above are still noticed in Adamawa State Pension Board since the Administration of Pay As You Go Scheme is still in practice there up to date.
2.2.3 Features of Budgetary or Pay As You Go Pension Scheme
I.Government funded the public sector scheme hundred percent (100%) (as it was a noncontributory pension scheme),
II.the pension and gratuity payment was done through budgetary allocations for each fiscal year,
III.only the employer contributes and employees do not bear the burden of contributions,
IV.Also for the PAYG scheme there is a general scale of benefit which is more generous than the new contributory scheme,
V.In addition it involved periodic pension increases with salaries because monthly pensions were always increased whenever there was a wage increase,
VI.Payment by the employer is deferred and there is no immediate pressure on employer's cash flow as payment is only made after retirement, Chilekezi (2005).
It can be observe from the above that PAYG is prone or susceptible to be ravaged with Administrative problems because of it over dependent on budgetary provisions for funding. Gbitse (2006) observes that the scheme in the public sector became unsustainable and was further compounded by increase in salaries and pension payments coupled with insincerity, corruption, inefficiency and ineffectiveness of the Pension Staff. It also includes bias and favouritism leading to delay in the payment, under payment, stoppage of the payment and other irregularities in the payment of the retirees‟ retirement benefits.
2.2.4 The Concept of Pension and gratuity
Pension is simply the amount set aside either by an employer or an employee or both to ensure that at retirement, there is something for employees to fall back on as income. It ensures that at old age workers will not be stranded financially. Gbitse (2006) look at pension and gratuity as aimed at providing workers with security by building up plans that are capable of providing guaranteed income to them when they retire or to their dependants when death occurs. The reason for pension scheme stems from the fact that first an organization has a moral obligation to provide a reasonable degree of social security for workers especially those who have served for a long period. Second the organization has to demonstrate that it has the interest of its employees at heart through pension schemes. The most popular way to determine the amount of an employee‟s pension is to base payment upon a percentage of the employee‟s earnings computed at an average over several years multiplied by the number of years the employee has served the organization or companyGbitse (2006). Thus, it is paramount for the scheme to be free of Delay payment, under payment, stoppage of the payment of the said pension and gratuity as well as corruption for the sake of the welfares of the retirees. These concepts are discussed below.
2.2.5 The Concept of Delay in Payment
In the natural still-sense of “Delay”, it is failure to happen or to do something at the intended or expected time. Delay in payment means putting action for payment off until later or after period of times. Delay in payment also is when the services or process for the payment of retirees‟ benefits are subjected to procrastination.
In Microsoft Encarta (2009), delay meansthe extent of the period of time by which somebody or something is made late or slowed down. Peter (2014), in his work “Development administration: obstacles, theories, and implications for planning”, affirmed that delayed payment of contracts, salaries, pension and gratuities including any vouched payments is an aspect of bureaucratic evils.
Although the scholar has forgotten that these lapses are not inherent in bureaucracyitself, but they are personal lapses of the officials not bureaucracy. Bureaucracy is just a formal procedure for accomplishing government activities in a formal organization. However, this formal procedure called “bureaucratic procedure” in administration used to be abuse by government officials that is why often people attached negative connotation to the concept.
For example, an official is expected to give out forms free of charge for the members of the public who came to apply for them. He hides the forms inside his drawer and informs the applicants there are no more. He advises, however, a system whereby prospective applicants know that on payment of some sum of money, the forms become immediately available.Another official or even the same one tells the public that the forms have all been used, but hides them in his drawer for distribution to his relations and friends. In these two instances, the behavior of the official has nothing to do with bureaucracy and the ills thereof. We see corruption, favouritism and nepotism at work, caused the applicants delay to get the form or did not have it at all. Perhaps, it is on this ground that Rose-Ackerman (2008) in her example of four generic low-level of corruption, posited that officials may deliberately delay the processes and procedures additionally to extract more and higher bribes from the populace.
As pointed earlier, the term bureaucracy is always abused because it is an adjunct of administration where officials hide under it to commit all sort of administrative evils such as delay in payment, under payment, stoppage of payment of the retirees their entitlements as the case in Adamawa State Pension Board. It is seen as Red-Tape full of paper work and delays which made it to be inefficient. Although it is government machinery meant to serve the people but has been hijacked by the bureaucrats or government workers to serve themselves. It is therefore an obstruction or threat to the people‟s rights, liberties and interests which has propensity of undermining or thwarts the welfare of the concerned people.
Nozick (1974:151) in his entitlement theory is against deprivation of someone of his entitlement as in the case of delay in payment of retirees in Adamawa State. He proposed three just principles for holding. According to Nozick, three issues are important in holding entitlement; 1. A person who acquires a holding in accordance with the principle of justice in acquisition is entitled to that holding, 2; a person who acquires a holding in accordance with the principle of justice in transfer, from someone else entitled to the holding, is entitled to the holding. 3. No one is entitled to a holding except by (repeated) applications of 1 and 2.
(Nozick1974:151). From the element of Nozick‟s entitlement theory, the retirees have meet up the condition of holding their pension and gratuity without delaying, stoppage or under paying them. Item number three however prohibited the pension staff from holding or delay the pensioners‟ benefits.
Chukwunenye et al (2010) in their empirical study on “staff welfare and productivity” affirmed that, delay in the payment of worker‟s salaries or retirees‟ benefits could result to apathy that might hinder efficiency in work performance. It could lead to embarrassing circumstances characterized by inability to pay rent and concomitant quarrel with landlord/caretaker; inability to pay for the schooling of his children; poor dietary intake that might result to malnourishment; inaccessibility to adequate Medicare; inability to meet with maturing social and financial obligations.
Chukwunenye et al (2010) have highlighted some of the effects of delay in payment of workers‟ entitlement. However the effects of such delay do not ends only on the direct beneficiaries along as tend to suggest by the scholars, it affect the entire society since societies operate as a system.It is on this ground that it were enshrined in Labour Act Chapter 198 (1990) part 1 section 1(4) No employer shall make delay payment or make any deduction by way of discount, interest or any similar charge on account of any advance of wages paid to a worker in anticipation of the regular period of payment of the wages.
In summary, bureaucracy is used as a reference to tasks and procedures of administration, as a body of administrative official who are corrupt, inefficient and always misuses power leading to delay in carryout official duties such as the payment of retirees‟ retirement benefits with imponderable effects in Adamawa State pension Board.
2.2.6 Concept of under Payment
Underpayment is an incomplete payment, it is a payment made less than what one was supposed to be paid officially.It is also a breach of holdings to which people are entitled. The concept of underpayment signify that someone is entitled to a holding of some certain amount of money as a result of service rendered or promise offered to him or even contractual term of bond that later was not completed or fulfilled.
Nozick (1974:151) in his entitlement theory stated that deprivation of someone‟s
entitlement is not just. He further affirmed that "a distribution is just if everyone is entitled to the holdings they possess under the distribution" Unfortunately, not everyone follows these rules," some people steal from others, or defraud them, or enslave them, seizing their product and preventing them from living as they choose, or forcibly exclude others from competing in exchanges.
Similar to Nozick, Rotimi et al (2013) also in their study on Corrupt Practices and Economic Development in Nigeria, stated that underpayment of someone his wages is an aspect of corruption that exists in different organizations in Nigeria. The major argument of their study is that development in Nigeria is always undermined by corrupt practices of those in the helm of affairs or administrators. Thus the poor become poorer and rich become richer.
The views of the scholars above focuses underpayment of someone from the angle of corruption, particularly Rotimi et al, but I don‟t think underpayment of someone is obvious that it must emanate from corrupt mind, although it may be, but is not obvious. There are lots of factors that may lead to underpayment of someone his entitlement. Underpayment of someone may be as a result of incompetency of the officers handling the schedule of the payment, which is their inability to compute the payable allowances well to achieve a desired result without. It could also be as a result of lethargy or indolence emanating from too much work on the officers handling the schedule or even as a result of poor organization of the entire administration of the organization concerned such in the case of Adamawa State Pension Board. To the researcher, this is what peter (2014) has in mind in his obstacle theory when he looked at administrative obstacles which include; (1) shortages of skills and tools; (2) difficulties of organization and structure; (3) political difficulties and (4) cultural and attitude barriers.
In shortage of skills and tools as an administrative obstacle, peter (2014) maintained that First, if there is a shortage of trained personnel, which is the most obvious in administration and Widely noted difficulty, the shortage generally afflicts all levels of administration, but is particularly acute with regard to 'support administration', I. е. middle- and lower-echelon personnel, and local administrators that handle most of the practical works. One expert has stated that for conveniences and effective administration, ten people are needed for 'support administration for every one person at the top.
This opinion aligns with the rational-legal bureaucracy of Max Weber, where he suggested for hierarchical arrangement of office or positions each under the authority or command of a higher one in pyramidal shape. And there should be division of labour with specified sphere of competence called official duties and powers, he also said there should be written rules for carrying out assigned tasked to be applied uniformly. If an organization operates in an organized form with high level of moral discipline as suggested in the rational-legal bureaucracy by Max Weber, there could be possibility to overcome some of the trivial lapses which have capacity of causing serious irreparable damage to the welfare of the interested people as in the case of under payment of retirees‟ benefits in Adamawa State Pension Board.
Nevertheless, even if such organized form of administration is achieved, yet there is still a problem of operative implements or tools to be solve. Lapses such as under payment will still occur if they are not adequately provided. That is why peter (2014) above mentioned operative skill and „tools‟ as an obstacle to administration. Tools are inanimate objects that aid office activities such as computer gargets, internet service, simple calculating machine, communication networks, good library, etc; it also involves adequate funding of the organization. If an organization lacks such aiding tools, no matter what, good administration will not be achieved leading to lapses such as under payment as a subject matter.
Reiterating the view of Peter (2014), where he mentioned “culture and attitudes” as an obstacle to perfect administration, seems to be an important factor to consider in the discussion of under payment of retirees‟ retirement benefits. Attitude in this regard is an arrogant or assertive manner or stance assumed as a challenge for effect. If an attitudes of public official deviated from the ethics and or rules of an organization there will be a bad effect as outcome which may subsequently impair the welfare of the concerned interest, such as in the case of the retirees in Adamawa State Pension Board. To support the view of Peter, Durkheim (1893) in his anomie theory, in his work titled “Division of Labour in a Society” discusses attitudes that impair negative effect under three elements. First, as Condition of deregulation; which occurs in society when the general rules of a society have broken down and that people no longer knows what to expect from one another. It is this state of deregulation that leads to deviant behavior. Second, Effects of social change; where people change from mechanical society where things are done rightly and according to rules or values of the society to organic society where people violet rules and values of the society by their actions and lastly, as Moral Deregulation; which refers to as a morally deregulated condition where people have inadequate moral control over their actions. Therefore, a given society or organization may be anomic if people do not know how and when to pursue their goal and when to stop striving for success at the expense of others‟ rights.
2.2.7 The Concept of Stoppage of Payment
The concepts of the stoppage of payment have attracted so many views and arguments from different scholars and practitioners. Others are looking at it as a product of corruption, others are viewing it as incompetency in discharging official duties, yet others consider it as a disciplinary measure as a result of gross misconduct, while others considered it as the failure of the system which deserves new reform. For example, Paul (2013) in his empirical study on “corruption as a problem of pension administration in Nigeria,” focused on why pensioners are suffering from a sudden stoppage of the payment of their pension entitlement in Nigeria? He contained that stoppage of the payment of someone his wages, salaries, retirement entitlement etc, no matter what the situation, is an aspect of corruption.
The view of Paul above could be right, particularly when we cast our minds back to how the police pensioners or retirees were deprived of their pension entitlement as a result of corruption in 2013. It follows that the Federal high court Abuja recently sentenced the culprit (the former Assistant Director in the Police Pension Office), Mr. John Yakubu Yusuf, for two years imprisonment with an option fine of N750, 000.00, after he admitted that he connived with others to steal over N20bn that should have been used for the payment of police retirement benefits, (Punch, 18th September, 2014).
However, the way Paul generalized the stoppage of the payment of someone‟s entitlement as corruption; I tend to disagree with that, because there are lots of factors that may lead to that, separate and distinct from corruption. For example, if there is no proper supervision from the superior officer on the activities of his subordinate, the subordinate may likely to commit errors in his activities or do whatever he likes which may lead to omission of some names from the pay-role and the victims will definitely get their salary stopped for the mean time, but not necessarily on the ground of corruption, rather as a result of poor attitude at work, inefficiency, poor administration and lazar-faire leadership. Also improper documentations after the screenings usually organizes by most Nigerian organizations may lead to the stoppage of payment.
However, people like Nwanolue and Iwuoha (2012: 12) view certain issues like the stoppage of the payment of someone his entitlement as a product of incompetency or inefficiency. Nwanolue et al (2012) argue that most of the plethora reforms in the public service in Nigeria were as a result of incompetency and ineffectiveness of the operating machineries leading to issues like waste, fraud, mismanagement and victimization such as the stoppage of someone‟s entitlements as in the case of the stoppage of retirees‟ retirement benefits in Adamawa State Pension Board.
In support of this view,Okeke et al,(2014) argue that the 2004, a new reform project, SERVICOM (Service Compact with all Nigerians), was launched and mandated with key underpinning principles; including commitment, prompt and efficient service, dedication, and attention to citizen needs and the right to social and economic advancement is meant to correct the inefficiency and unethical attitudes that bedeviled the Nigerian public organizations coupled with some parochial selfish interests that mostly thwarts the welfare of disadvantaged majority citizens, as in the case of the retirees in Adamawa State who always worn outtheir shoes in the course of exodus trekking to the Public Complaint Commission (PCC) in Adamawa State seeking for justice on the stoppage of their monthly pension.
Similar to the quadruple brothers above, some scholars like Okonjo-Iweala and OsafoKwaako, (2007) believed that the failure of the entire system brought issues like oversized grown civil service in Nigeria, poor remuneration, poor pension and gratuity, under payment of pension and stoppage of the payment of pension benefits both at Federal, States and local governments, resulting in poor service delivery that mutilate the welfare of the populace which deserves a new reform.
Kwaako et al (2007), maintained that the under skilled work force in which employees often did not have the appropriate technical skills needed for their assignments exacerbated the problems like the stoppage of the payment of retirees‟ monthly pension.More broadly, the government estimated that about 70 percent of federal civil servants for example, had a high school diploma or lower, with less than 5 percent possessing modern computer skills, Olukemi (2013). He continues that, civil servants generally received low pay and poor fringe benefits such as free housing. Weak management and absence of oversight also leads to the problem of ghost workers on the government payroll; while personnel and pension registers often were unreliable. Moreover, a weak incentive structure in the civil service, which did not foster good performance, resulted in a weak work ethic and poor service delivery by many government ministries at Federal and State levels often characterized by hidden or outright corrupt behavior on the part of many civil servants. These constitutes a hog to the free running of the system that is fraught by ills like stoppage of the payment of retirees, unpaid workers salaries, low infrastructural development, debts burden etc. Reforms are therefore needed to re-professionalize the civil service and increase its focus on service delivery.
To Kwaako et al (2007) and Olukemi (2013), the variegated mal-administrative practices and weaknesses mentioned above breeds all sort of administrative lacunas including the stoppage of the payment of retirees‟ monthly pension in Adamawa State impinging and afflicting their welfare. The scholars therefore suggested that when a system got deteriorated like this, the only way-out is to bring reform. I quite agree with the scholar‟s view. This suggested the reason why government brought the 2004 pension Act. According to Ije (2001) in the last two and a half decades, most pension schemes in the public sector in Nigeria had been poorly funded, owing to inadequate budget allocation. It was ravaged with all forms of maladministration, ranging from nonpayment of pension benefits, delay in the payment, stoppage of the payment of the retirees etc. the administration of the scheme was generally weak, inefficient and non-transparent. There was no authenticated list or data-based on pensioners both at State and federal levels. Ije maintained that, Based on the enumerated pension problems, the federal government constituted committee to look into the menace of pension schemes and proffer solutions. Thus, the Pension Reform Act 2004 was signed into law in 2004 and effective from January, 2004. The Act brought a Defined Contribution System that is fully funded, privately managed and based on individual accounts for both the public and private sector employees.
The major problem in the case of Adamawa State now is because they are yet to adopt the new contributory pension Act 2004. That is why the pensioners are still suffering from the plights of the budgetary or Pay As You Go old pension scheme. Obi (2013) affirmed that “I personally perceive that the functional mechanisms of the new contributory scheme serves as checks and balances for effective management and control of the mal-administrative and corruptible practices in Retirement benefits, if strictly adhered to”.
2.2.8 The Concept of Pensioner’s welfare
Pensioners‟ welfare is a product of adequate payment of pension and gratuity of
pensioners. It is difficult to discuss pensioners‟ welfare separate from their pension and gratuity. It is an adjunct of pension and gratuity. While pension and gratuity stands as a means, pensioners‟ welfare stood for the end.
In a general term, Williams (1976: 281) viewed welfare as a concept derived from well-fare that is “well” in its still familiar sense and “fare” primarily understood as journey or arrival but later also as supply of food, well-being, happiness, health and prosperity of a person. Also Pa‟ag (1993:31) perceived welfare as the evaluation assigned by the individual to income or, more generally, to contribution of our well-being from those goods and services we can buy with our money. Pensioner‟s welfare as agued by Titmuss, has been defined in various ways. One definition emphasizes that pensioners‟ welfare “includes pensions for employees, employees‟ wives and dependants; child allowances; death benefits; health and welfare services; personal expenses for travel, entertainment, residential accommodation; children‟s school fees; cheap meals, unemployment benefit, medical bills and an in- calculable variety of benefits in kind”
(Titmuss 2014). Titmuss‟ in his approach ended up enumerating the indicators or hallmarks of pensioners‟ welfare (pension and gratuity) than defining it. His definition is based on those variables that are involved in the computation of pensioners‟ benefits. This kind of definition set a stage for cross-national comparism. In Nigerian pension system for example, most of the variables incorporated in his definition of pensioners‟ welfare are not obtainable and thus, not practical. Goodin and Rein argue, pensioners‟ welfare consists of “market-driven social benefits provided by private employers and the state in its role as employer after employee‟s retirement”, (Goodin & Rein 2001). These scholars perceived pensioners‟ welfare as a part or product of market business between the employee and the employer that hold employer responsible to pay the employee some certain amount for his survival after retirement. Goodin and Rein‟s submission is a reality of pensioners‟ welfare. However, they are criticized on the ground that they did not specify the nature of such social benefits that are given to employee after retirement.
„Social benefit‟ is a vague or ambiguous statement, it could be in cash or in kind or even in abstract term, they are not specific about it. Similarly, Sinfield argues, “another way of expressing this is that it is the welfare provided through employment” (Sinfield 2014) or, to elaborate, that “pensioners‟ welfare covers benefits received by an employee through or as a result of his employment over and beyond the public benefits such as national insurance” (Sinfield 2014). Farnsworth asserts, “a recent analysis focuses on the fact that „non-statutory‟ provisions include a range of voluntary social benefits that are provided by employers” (Farnsworth 2014, 438). In this view, pensioners‟ welfare is seen as benevolence by employer to employee after retirement. These approaches above are both related to the fact that certain kinds of goods and services, which can resemble welfare benefits, can be obtained via the employers. This does not imply that the employers necessarily are paying for it, but they might do if they, for example, trust that it is good for business. (Buchmueller 2014) argues, occupational or pensioners‟ welfare is thus goods and services provided for by the employers which can be seen as a functional or near-functional equivalent to public welfare.
Looking at the various submissions by different scholars and practitioners above, it seems that pensioners‟ welfare remains such a difficult concept that has no specific definition. It has always been defined narrowly and differently based on the practice of the particular environment that a definer finds himself. For example, Titmuss (2014) above defined pensioners‟ welfare using those variables that made up pensioners‟ welfare as a whole based on his environment. On the other hand, Goodin and Rein (2001), only knows it as a social benefits given to retirees by the employer, Sinfield, and Farmsworth (2014), channeled their argument on pensioners‟ welfare as benevolence by employer to retirees. Generally, deducing from the above views, pensioners‟ welfare is as a result of symbiotic relationship between the employer and the employee normally visible at the end of work term of the employee. It is a systematic relationship that consist input and output between the employee and the employer which provides retirees‟ well being after service of his/her employer.
However, the following scholars focused pensioners‟ welfare differently. For example, Faphunda argues, Pensioners welfare orretirement benefits simply means the amount of the money set aside eitherby the employer or an employee or both to ensure that at retirement from the meritorious service, there is something asa source of income for an employee to fall back on, Fapohunda, (2013:31). This view does not distinguish between the new contributory and the
„PAY AS YOU GO‟ old pension scheme in Nigeria. It embraced the two. However, the most important point in his definition is the recognition that retirement benefits is meant to provide the retirees with the means of income at his/her retirement. Analyzing this opinion, it means pensioners‟ welfare or a retirement benefit is a deliberate plan focusing on the provision of the means of survival for the employee after his/her retirement. It is a means through which the retirees enlarge their choices, such as food, shelter, clean water, medical services, education for children etc.
Ngu (2010:191-192), in his own view, assert that “ the main objective of pension scheme is to provide a retirement benefits to employees leaving the services of their employers at formalized retirement age, usually 60 (now 65) years for public servants, and 65 (now 70) years for judges in Nigeria, as at 2010”. This view is similar to that of Fapohunda. The mainstream of these cognate views is that pensioners‟ retirement benefits is to provide for the retirees‟welfare or means of livelihood after retirement for the employees. However, the unique point of the later view to the former is that the scholar specified that the retirement benefits are given at the “Formalized retirement age”. The concept “formalized” in his definition, draws our attention to look at retirement benefits as legal bond between the employer and the employee.
The concepts of the “age” of 60 or 65 also, connotes that, this bond were made with a mind that at these ages the retirees have become old and could not help themselves meaningfully, thus they need financial support to keep them surviving. Reiterating the cognate views above, the following scholars view pensioners‟ welfare as a legal contract. Pitch and wood agues, retirement benefit connotes a form of official obligation in an employment relationship. It is a legal and economic obligation in which employers of labor are mandated to fulfill in her contractual relationship with employees”, (Pitch and Wood, 1999 in Sunday, 2003:58).This definition is associated with state welfares. The Pitch and Wood‟s submission signified that retirement benefit is a result of a contract, a fruit of the bond or compact between the employer and the employee right from the day of employment of the employee. In fact, these scholars have shaded more light to our understanding of Pensioners‟ welfare or retirement benefits‟.
Drawing from these views above, pensioners‟ welfare or retirement benefits are parts or element of the employees remuneration, is one of indispensable form of employees‟ solid benefits. To that end, it is obvious to conclude that pensioners retirement benefits is a system designed to provide the retires ofan organization with a means of security on retirement to have a standard of living reasonably consistent with that which they enjoyed while in the service. In view of the above therefore, for the welfare of the pensioners in Adamawa State to be provided fully and achieve the purpose which it is meant to achieve, that is for them to be able to enlarge their choices, then their pension and gratuity must be free from delay in the payment, under payment and stoppage of the payment by the pension officers, there must be a need for its effective administration.
Finally, the various scholars and practitioners‟ views on the concept of pensioners‟ welfare has been discussed exhaustively and analyzed above, and established from the common opinions that pensioners‟ retirement benefit is a system designed to provide the retires of an organization with a means of welfare or security on retirement to have a standard of living reasonably consistent with that which they enjoyed while in the service. At this point we shall analyze
Adamawa State pensioners‟ Retirement Benefit.
2.2.9 Pensioners’ Retirement Benefits in Adamawa State
The evolution of Adamawa State Defined Benefit Pension Scheme could be traced from the Nigerian Pension reform‟s historical antecedent. It emerged as a process. Balogun (2006) assert that the civil service pension scheme of Nigeria‟s Defined Benefit or Budgetary Allocation was established by the basic pension Decree 102 of 1979. Similarly, Uzoma (1993) argue, this decree remained the operative law on public servants and military pensions in Nigeria until June 2004.
The establishment of the former Gongola State from the then Adamawa and Sardauna provinces of the North Eastern State on the 3rd Feb. 1976 came up with the PAYG pension scheme. Similarly, the creation of the present Adamawa State from Gongola State on the 27th August 1991, maintained the same pension scheme (Defined Benefit or Pay-As You Go (PAYG) which is funded 100% by the government of the state through budgetary allocation up to date.
The Adamawa State pension law empirically defined pensioners‟ welfare similar to the definition offered by Titmuss (2014) above as include; Basic salary at the time of retirement, Rent subsidy, Transport allowance, Utilities, Meal subsidy, and Domestic allowance (for officers on GL 15 & above). This definition is a replicate of what the federal government of Nigeria was practicing before it was toppled by the 2004 contributory pension reform Act, which Adamawa state is still adamant to adopt. Furthermore, section 8(1) of the law states that; an employee retiring from his service should send his notification letter to the Board at “Least” one month before the official date of his retirement, so that the whole process will be completed within this period to mitigate the cases of delay in the payment of pensioners‟ retirement benefits (pension and gratuity).
2.2.10 Review of Empirical Studies
In order to complement the conceptual review, previous studies by other researchers are reviewed accordingly. For example, Olu et al (2005) in their study on the “management of pension scheme in Nigeria” focused on the upward review of pensions and gratuities in the administration of pension scheme in Nigeria. Their study revealed that the upward review of pensions and gratuities in the country without appropriate financing the scheme is the major problem of pension administration in Nigeria.
The study above has left a wide gap that desired to be filled. For example, the study failed to take note of some of the administrative deficiencies such as workers‟ inefficiencies, inadequate skilled personnel, political interferences in the activities of the pension officers, corruption and lazier-fare leadership leading to delay in the payment, under payment and the stoppage of the payment of retirees‟ benefits which this study attempt to fill.
Obi (2013:10) in her study on corrupt practices in Nigeria‟s retirement and pension scheme revealed various administrative evils in the retirement benefits of the pensioners in Nigeria, through 500 respondents across four states including Lagos, Delta, Rivers and Enugu and the Federal Capital Territory Abuja. Her objective was to determine the corruptible practices which exist in gratuities and pensions in Nigeria since 1979, and up-to-date (2013).
The basic argument of her study was that irregularities in the payment of pensioners‟ retirement benefits pose adverse effects on the pensioners. She hypothesized that delay in the payment of pensioners‟ pension and gratuity in Nigeria is not the function of corrupt station. This tentative statement was rejected having tested the hypotheses. The study established that there were other factors also that affects pensioners resulting from the delay of the payment of the retirees, these include bribery/financial demand for services constituted 25%, risk and distant travel in pursue of retirement benefits is 17.8%, over-crowed and noisy venue is 21.8% . The study concluded that the corrupt practices in the Nigeria retirement and pension scheme affect the pensioners greatly.
Although the study has recorded a level of achievement, yet it left a lot to be accomplished. For example, in her methodology she only uses pensioners as her population and over look the federal pension staff which would suppose to form part of her population to avoid bias. Her data instrument also was not adequate enough to collect all the relevant data on independent and dependent variables in order to strike the balance and avoid bias, since only the questionnaire instrument was used and was served only on the retirees. Also the study did not say anything about pension scheme as suggested in the topic, and did not tell us the effects of the delay in the payment of the retirees‟ benefits on pensioners as one of the objective of the study. The study did not reveal other causal factors of delay in the payment of retirees such as maladministration, political interference of the politicians and inadequate funding which this study has revealed. And the study did not acknowledge the existence of underpayment, stoppage of the payment and nonpayment of the pensioners‟ retirement benefits as if they were not problems affecting the pensioners.
Paul (2013) in his empirical study on corruption as a problem of pension administration in Nigeria, also focused on why pensioners are suffering from sudden stoppage of the payment of their pension entitlement in Nigeria? He did not observe any administrative problems as suggested in the topic as if that is not a problem. He also hypothesized that there is no significant relationship between corruption and sudden stoppage of pensioners‟ entitlement in Nigeria. Although the hypotheses was rejected which indicated there is relationship between corruption and sudden stoppage of the payment of pensioners‟ entitlement, the extent of the relationship was not revealed because the chi-square which was used to test the hypotheses instated of correlation analysis is not capable of determining the extent of their relationships. The study revealed other factors that are responsible for sudden stoppage of the payment of pensioners‟ pension through 300 respondents to include lack of trained personnel and absence of computer gadgets in handling the jobs.
Despite the revelations made by the study above, the study failed to recognize the fact that stoppage of payment could be due to administrative problem and inadequate funding.
Sometimes the sudden stoppage of the payment of pensioners‟ entitlement could result from the screening usually organized by the national pension board to checkmate the ghost syndicated pensioners but the study did not recognized that. The study also failed to investigate the effect that such sudden stoppage of payment of retirees posed on pensioners.
Also, a study by Omoni (2013) on „an overview of the administration of new pension scheme and teachers‟ level of awareness in Delta State of Nigeria” left a lot of loop-holes. For example: Her methodology was not good enough to generate all relevant dada in order to strike balance and ovoid bias, since only questionnaire instrument were used and was served only on the teachers and sidelined staff of the primary schools Board and ministry of Education. The study also neglects one important unit of the population completely, that is staff of the pension administrators and dealt with only primary and secondary schools teachers.
Rotimi et al (2013) also in their study on Corrupt Practices and Economic Development in Nigeria, revealed by 45% respondents that underpayment of someone his wages is an aspect of corruption existed in different organization in Nigeria. The major argument of their study is that development in Nigeria is always undermined by corrupt practices of those in the helm of affairs. Thus the poor become poorer and rich become richer. The central hypothesis tested is that a common Nigerian can afford his basic needs because of corruption did not hold to be true. The study established that lack of discipline in the public organizations exacerbates the increasing corruption in the country. However, because the study failed to tell us the effect of such under payment on the beneficiaries and did not pin down the study to specific organization left much gaps uncompleted.
In his own empirical study on occupational and workers‟ retirement welfare in developing countries, Bent (2012) focused on the welfare of workers at work and after their retirement. He asked specifically whether or not it is solely to be understood welfare in monetary terms or whether it is necessary to include non-monetary aspects such as happiness. The study also asked what the social science understanding of workers and retirement welfare (occupational welfare) has to offer and what its implication are for the data which is needed to be measure. The study stressed that the only obvious way to measure welfare at and after work is in terms of money. He proposed that retirees‟ or workers welfare is the sum total of individual workers or retirees‟ wellbeing. The study revealed the social indicators of workers and retirees‟ welfare to include satisfaction of payment, health, and belongingness. Others include essential needs of individual workers, retirees and their families, enlarged capabilities such as children‟s education, housing and charitable activities. The study concluded that the essence of occupational welfare is to provide workers and retirees an economic satisfaction, psychological, sociological and even philosophical relief or contentment.
According to Chukwunenye et al (2010) in their empirical study on “staff welfare and productivity” focused on effects of delay in the payment of worker‟s salaries. It was revealed by 67% of the respondents that delay in the payment of worker‟s salaries could result to apathy that might hinder efficiency in work performance. It was also found through 63% that it could lead to embarrassing circumstances characterized by inability to pay rent and concomitant quarrel with landlord/caretaker; inability to pay for the schooling of his ward(s); poor dietary intake that might result to malnourishment; inaccessibility to adequate Medicare; inability to meet with maturing social and financial obligations.
The study is considered to have achieved a great result; however it was quite narrowed to delay in payment as if workers are not facing the problems of under payments and stoppage of the payment of their salaries in the various organizations that they failed to cover. However, this study attempts to fill this gap.
After a critical review of some related literature on the administration of pension scheme and pensioners‟ welfare, the findings of scholars reveals various administrative irregularities that are impinging on pensioners‟ welfare. The revelations by these scholars are not without short falls or missing gaps which this study attempt to fill them.
2.3 Theoretical Framework
The theoretical framework for this study is the social contract theory. Thomas Hobbes(1651)is regarded as the first modern philosopher to articulate a detailed social contract theory (1588–1679)in his book titled“The Leviathan”.
The justification for the choice of the theory is based on its ability to diagnose and explained the contractual relationship between the sovereign government and its citizens, particularly its retired workers. It can also be justified on the fact that it dichotomizes between what is expect of government to fulfill in its contractual term as well as that of its citizens. It is therefore found worthy to explain the contractual term between the Adamawa State Pension Board (government) and the pensioners in the State on the administration of their pension and gratuity.
Elements of Social Contract Theory
Rauscher. F (1762) in Alubabari (2012) suggests five elements of social contract theory into which contractual approaches may be analysed, namely: (1) the nature of the contractual act; (2) the parties to the act; (3) what the parties are agreeing to; (4) the reasoning that leads to the agreement; (5) what the agreement is supposed to show.
2.3.1 Relevance of the Theory to the Study
In terms of its relevance to the study, Adamawa State government is into contract with the State retirees of the State. The contractual instrument or act as in the first element of the theory is Adamawa State Pension Law 2000. The parties to the act as in the second element are Adamawa State government and the retirees of the State. What the parties were agreed to, are explicit in sections 5a which provided for the effective pension administration in the State, section 5c, provided for the prompt payment of pension and gratuity to retired civil servants of the State and section 5d provided for the regular payment of the retirement benefits to the pensioners of the State. Also, section 8 (1) stated that the procession of the retirement benefits of the retiring officer in the State should be completed within one month to the official retirement date of the officer concerned in order to avoid financial handicap after retirement. More so, the reasoning that led to this agreement or contract as in the 4th element of the theory is for the retirees of the state to be provided with the means of livelihood having leave the service of their employer at fulfilling their own term of contract by serving the State government for 35 years of service and 60 years of age, whichever that came first. Finally, as in the 5th element of the theory, what the contract or agreement is expected to show is effective administration of the retirees‟ pension and gratuity, without the delay in the payment, underpayment and the stoppage of the pensioners‟ monthly pension to the extent that it will boost their welfare and they can be able to enlarge their choices of life.
However, social contract theory is not without criticisms. For example, Eddy .A and K.K Misra (2004. 74-76) in Alubabari (2012) raised their criticism from the historical, legal and philosophical perspectives. Historically they argue that the idea of a period in time when hitherto free men came together to enter into a contract for the establishment of the state is fictitious. It is also argued that 'primitive men lacked the level of rationality which the contract theory ascribes to men in the State of Nature. From the legal perspective, they said that for the sake of critical argumentation, it is conceded that the resultant contract would still lack a binding force over the parties, and finally from the philosophical angle they argue that it assumes that the relation between the individual and the state is voluntary. But according to the critics, membership in a state is obligatory; hence, the obligations of an individual to the state are not contractual.
However, aside these weaknesses, social contract theory has made a significant
contribution in theorizing in the field of humanities.