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The broad objective of the study is to assess the pension reform agenda of Olusegun Obasanjo Administration 2004; a study of Federal Ministry of Interior, Anambra State. The descriptive research method was used in carrying out the study, the method was chosen because it is the method that best interprets the study without loss of facts. The research findings revealed essentially that;

i.                    Government has not worked out the modalities properly on the separation from the erstwhile old scheme from the new one.

ii.                  The reform agenda depends on government’s yearly budgetary allocations, which also depends on who is in control of the machinery of government and the revenue condition’s of the Federal government.

iii.                The obvious escalating expenditure of government in other areas such as education, agriculture, health and administration that compete with pension expenditure, government can not be trusted to solely pay pension.

Based on the findings, major recommendations are that;

i.                    Government should try as much as possible to increase her contributory part to fifteen percent(15%), while the employee should contribute five (5%) only, reason been that employees should be assisted in the provision of individual socio-economic needs while in active services.

ii.                  Various levels of government should be mandated to keep a fixed percentage of their revenue with the Central Bank of Nigeria (CBN) to carter for pension need of their workers as a way of securing the future of the retirees.

iii.                Any pension fund administrator, custodian that is found uncomfortable or dubious in his transactions should be blacklisted instantly and pension fund records and funds in his keeping be retrieved and transferred to another custodian or administrator.

iv.                 Government should mandate all the PFAs to pay interest rates according to all the customers.


       1.0                             INTRODUCTION


Prior to the enactment of the Pension Reform Act 2004, pension scheme in Nigeria had been bedeviled by many problems. This scenario necessitated the introduction of a new regime in Nigeria by the administration of President Olusegun Obasanjo. The pension system, unless specially adopted to meet the hardship of time, results in hardship to the family of a white or blue collar worker who dies prematurely in service, or on the verge of retirement or before enjoying the pension benefits for any appreciable period, [Abah, 1999]. However, pension can be classified as contributory and non-contributory pensions. A pension scheme is said to be contributory when both the government and the employee contribute [not necessarily equally] towards its payment. It is non-contributory if the whole amount for its payment is funded by the government or the employer only, (Chukwuemeka, 2008). Factually, the emergency of pension scheme allowed workers to retire and the changing attitudes made it socially acceptable to do so.

The country operated Defined Benefit Scheme (gratuity and pension) between January 1, 1946 and June 2004. Nigeria in 1951, introduced pension benefits into the public sector with effect from 1946, the idea brought about a major attraction for employment in the public service. Nevertheless, the pension Act 102 of 1979 was the main legislation guiding the entire public service.  To qualify for pension then, the officer involved must have served for a minimum of 15 years and gratuity period was a minimum of 10 years of service. By 1992, it was reformed to minimum of 10 years for pension and 5 years for gratuity. One notable fact during the period was the pension scheme success recorded by the private sector. Most schemes in the public sector were insured schemes defined by contributions of employees and employers.  It provided large sum of retirement benefits or earlier withdrawal. Pension fund managers, portfolio managers, bankers were relevant in pension fund administration in the public sector. Again, decree 77 of 1993 established the Nigeria Social

Insurance Trust Fund (NSITF) to replace the old National Pension Fund (NPF) managed by the Federal Government for private sector. Nonetheless, under this scheme, there were poor administration, inadequate delivery system, and lack of adequate records of movement from one employment to the other. Again, the Pension Reform Act was enacted on the 25th June, 2004 and came into effect on 1st July 2004. The Reform established a Defined Contributory (DC) scheme against the former Defined Benefit (DB). Dike, (2006) stated that, ‘the enactment of the new pension Act 2004 signed into law by President Olusegun Obasanjo on 30th June, 2004 has opened a new vista in the management of pension fund. The present pension scheme regulated by the Pension Commission is public and private sectors driven with government only playing its part by contributing its quota to the relevant pension managers for private and public servants.’

 In line with the background information is the issue of pension crisis before

Define Contribution (DC), such crisis were:

=      Pensioners not being paid entitlements regularly.

=      Existence of ghost pensioners in the public service.

=      Pensioners dying on verification queues.

=      Unstructured and unfounded private sector scheme.

=      Diversion and mismanagement of existing pension fund by Board of 

        Trustee  (BOT) and fund managers.

Against this background, the under listed formed the main objectives and features of the Pension Reform Act 2004;

I.             To ensure that every person who worked in either the public service of             the Federation, Federal Capital Territory or private sector receives his  

                  retirement benefits as and when due.

II.          To assist individuals by ensuring that they save for their livelihood during            old age and thereby reducing old age poverty.

III.       To ensure that pensioners are not subjected to untold suffering due to                     inefficient and cumbersome process of pension payment.

IV.       To establish a uniform set of rules, regulations and standards for the     administration and payment of retirement benefits for the public service of the federation, federal capital territory and the private sector. V.      To stem the growth of outstanding pension liabilities.

In fact, the pension reform programme is governed by the key principles of sustainability, safety, and security of benefits, transparency, accountability, equity, flexibility, uniformity, and practicability.

As the major function of the commission, the pension reform Act 2004 established the National Pension Commission (NPC) as the body to regulate, supervise, and ensure the effective administration of pension matters in

Nigeria, (

Other functions of the commission include;

a.   Regulation and supervision of the scheme established under the Act.

b.   Issuance of guidelines for the investment of pension funds.

c.   Approving, licensing, regulating, and supervising pension administration, custodians, and other institutions relating to pension matters as the commission may, from time to time, determine.

d.   Establishing standards, rules, and guidelines for the management of the pension funds under the Act.

e.   Ensuring the maintenance of a National Data Bank on all pension matters.

f.    Carrying out public awareness and education on the establishment and management of the scheme. 

g.   Promoting capacity building and institutional strengthening of pension fund administrators and custodians.

h.   Receiving and investigating complains of impropriety leveled against any pension fund administrator, custodian or employer or any of their staff or agents.

i.     Performing such other duties which, in the opinion of the commission, necessary or expedient for the discharge of  ii. Its functions under the Act.(National Pension Commission).

Again, the National Pension Commission shall have power to do the following;

I.                  Formulate, direct and oversee the overall policy on pension in Nigeria.

II.               Fix the terms and conditions of service including remuneration of the employees of the Commission.

III.            Request or call for information from any employer or pension fund administrator or custodian or any other institution on matters relating to retirement benefits. 

IV.            Charge and collect such fees, levy or penalties, as may be specified by the Commission. 

V.               Establish and acquire offices and other premises for the use of the Commission in such location as it may deem necessary for the proper performance of its functions under the Act. 

VI.            Investigate any pension fund administrator, custodian or other party involved in the management of pension funds under the Act. 

VII.         Establish standards, rules and regulations for the management of the pension funds under the Act. 

VIII.      Impose administrative sanctions or fines on erring employers or pension administrator custodian. 

IX.            Order the transfer of management or custody of all pension funds or assets being managed by a pension fund administrator or held by a custodian whose license has been revoked under this Act or subject to insolvency proceeding to another pension fund administrator or custodian, as the case may be. 

X.               Do such other things which in its opinion are necessary to ensure the efficient performance of the functions of the Commission under the Act. (http;// Onyishi (UNN) opined that those who are discharged through the natural elimination process of retirement have to be replaced. This is why government organization are usually in hierarchy, normal promotions from one grade or rank to a higher one is a way of achieving this objective. Other methods include lateral and vertical transfers, secondment and new appointments. This is why the Nigerian civil service is made sufficiently flexible in structure that critical manpower can be deployed and redeployed to area of dire need.

Nwizu (2002) stated that there are several factors which tend to impede the processing of retirement benefits claims of retiring and retired personnel. These factors can be grouped under two sub-headings viz. the intrinsic factors and the extrinsic factors.

The intrinsic factors; these are those factors which militate against the quick processing of retirement papers and the eventful payment of the benefits which occur  as a result of the Organization and management of retirement benefits. These factors cause a lot of pains to prospective retirees, such factors are:

=         Some beneficiaries are quite ignorant about their rights, the rules and                  the  administration such as retirement benefits.


Again, most of the would-be beneficiaries appear unprepared and not psychological attuned to the realities of retirement.


In some cases the staff involved to receive notice of retirement only at

the last minute, causing uncertainty in the mind of the retiree whether such notices would be implemented.

Extrinsic factor: the prospective retirees from the federal ministries either due to ignorance or fear of the unknown over stay their welcome in the service. This means that they stay beyond the statutory requirement for retirement. The rules have it that any prospective retiree who overstays in service will have all the excess salary and allowance payments made to him during the period of overstay deducted from his retirement benefits.

In Nigeria, the prescribed age of superannuation or retirement varies from 60 to 65 years. This varies from country according to the climatic condition and life expectancy. In the United States of America, it is 65 to70 years, in Britain 60 to 65 years, and India 55 in case of non-ministerial and 60 in case of ministerial services (expected in case of those not in service on 31st march 1938, for whom it is 55). However, in Britain there is an optional age of retirement, and compulsory one at 60 or 65 years respectively. At 60, an employee has the option to retire on the usual pension rights if he so wishes and the government  has option to make him retire if it thinks it fits in the interest of efficiency but 65 he must compulsorily retire, (Emma, 2008).

In fact, many centuries ago, the Greek Philosopher Socrates, told us a home truth that says, the unplanned life is not worth living. Equally, there is a time Maxim that say, whoever fails to plan surely plans to fail. These truths have been lived out by thousands of retirees who failed to plan their retirement with carefulness and studied attention. Honestly, as a result of lack of planning, many a retiree has had his or her peace of mind dashed on the rocks of financial insecurity and embarrassment during their retirement periods, (Onuigbo, 2004).

Again, the amended pension and gratuity policy of 1997, of the federal government of Nigeria was intended to reflect the austerity measures of the government of General Olusegun Obasanjo. The policy intended to cut down certain pension and gratuity allowances to retiring officers. Its salient features include;

-                       It cancelled the gratuity allowances meant for officers retiring after less than 10 years of service.

-                       It reduced percentage for pension and gratuity; officers retiring after less than 15 years of service would no longer be entitled to pension whether or not they had attained the age of 45.

-                       Officers (Civilian or Armed forces personnel) who are retired from the service in the public interest after serving for 15 years or more are entitled to the payment of a pension immediately on retirement, irrespective of their age at retirement.

According to Ugwu, (200:120) a retiring person is expected to be given certain benefits such as gratuity and pension, while gratuity is supposed to be paid as the worker makes his/her exit. Pension is expected to be a regular payment (on amount due) until the day of the retirees exit.

Again, the emergence of pension programmes allowed workers to retire, and the changing attitude made it socially acceptable to do so. For example, majority of the American workers retirement became economically feasible only after social security was established in 1935 as a way of opening up jobs for the vast number of younger unemployed workers during the Greater Depression. Later, programmes offering early retirement benefits further encouraged the exodus of older workers from the labour force, (Atchley, 1982).

Retirement has been blamed for a variety of physical and psychological problems, including death. But research has shown that there is no casual relationship between retirement and illness or death. Of course, some people became ill and die after retirement, but usually they were in poor health before retirement. Indeed, they may have retired because of their health, (Minkler, 1981). In one survey, about a third of the workers reported that retirement improved their health, and only about 3% thought their health worsened, ( Rosenberg,1970).

A more recent study suggests that health improvement is especially likely to occur if retirement provides a release from the stress and strain of a job, (Ekerdt,1986). The desire to return to work arises largely from being bored with retirement or from insufficient pension and social security benefits. 

Against the backdrop of pension Act 2004, (Buchi, 2008) opined that the low pensioners who had successfully retired from service in the lower cadre must be appreciated with such honours, which must be seen and regarded as merit award. He maintained, the criteria must be adjusted to include the core pensioners who may have lived in their villages after retirement. They are proud of their calling as retirees and never compromised their positions while in service. The time has come for pensioners and aged to enjoy the fruits of their youth. They must have enabling environment to live out the rest of their days in peace without any regret of serving their nation.


One of the major administrative problems confronting Nigeria is how to device an appropriate strategy to manage effective pension fund for its retired workers. The incidence of absolute poverty amongst retirees has increased geometrically as a result of pension management problems. However, as a result of some bottle-neck in the administration of pension fund many workers fear retirement. Retirement which ought to be seen as a glorious separation or quit stands as a powerful instrument of fear to the retirees. 

But then, since retirement is like death, we can run but can not hide from it. This is because, for everything there is a season and a time to every purpose under the heaven, Ecclesiastes (3: 1).

Since this is so, then finding an appropriate strategy for effective management of pension fund becomes a development out of extreme necessity. Several factors have been identified as the major barriers to pension fund management in Nigeria. 

Firstly, in the implementation of the new federal government pension scheme, other tiers of government inability to implement the policy is a major problem; state and local governments and even private establishment still owe their employees backlog of pensions.

Secondly, political climate is another issue worthy of consideration. In a situation where subsequent administrations find it necessary to do away with pension Act due to one political reason or the other, would-be retirees ought to think twice about pension reform Act, 2004.

Thirdly, since there is no effective deadline for all the tiers and agencies of government, even the private sectors to implement the pension Act, as some have started implementation whereas others are yet to start, where then do we go with the pension reform Act, 2004.  

Fourthly, it is a great challenge in an event where some employers                   actually deduct the pension fund but do not forward same to the                   relevant Pension Fund Administrators (PFA).  


  The broad objective of the study is to assess the pension reform agenda of

Olusegun Obasanjo Administration 2004. A study of Federal Ministry of

Interior, Anambra State, Nigeria.                                                             

The specific objectives are as below: 

1)    To ascertain if the periodic contributions and their investment are left to the whims and caprices of politicians. 

2)    To determine the rate of pension contributions were adequate to provide the needed benefits of would-be retiree.

3)    To ascertain if late and non-payment of pension entitlements leads to wide spread complaints and death among retirees.

4)    To ascertain if the incidence of transition gap and the funding system of the scheme do not affect adequate and early payment of pension


1.4        HYPOTHESES

Hypotheses are guide for the researcher on the line of his study. They tend to serve as assumed answers to the principal questions raised in the study. The correctness of which shall be assessed in the course of the study.        

For the purpose of this study, the following hypotheses were tested: 

Hypotheses one 

Ho:  The periodic pension contributions and their investment are not left to the   whims and caprices of politicians.

H1: The periodic pension contributions and their investment are left to the        whims and caprices of politicians. 

Hypotheses two

Ho: The rate of pension contributions were not adequate to provide the needed        benefits of a would-be retiree. 

H1: The rate of pension contributions were adequate to provide the needed        benefits of a would-be retiree. 

Hypotheses three

Ho: late and non-payment of pension entitlements do not lead to wide-spread        complaints and death among retirees. 

H1: late and non-payment of pension entitlements lead to wide-spread        complaints and death among retirees. 

Hypotheses four

Ho: The incidence of transition gap and the funding system of the scheme do         not affect adequate and early payment of pension entitlement.  H1: The incidence of transition gap and the funding system of the scheme        affect adequate and early payment of pension entitlement. 


This work is undertaken out of the need to assess the Pension Reform Agenda of Olusegun Obasanio Administration, 2004: a study of Federal Ministry of

Interior, Anambra State. 

Consequently, we believe that the results of this study will have the potentiality of generating comprehensive and effective assessment strategies capable of addressing various conflict situations within the pension scheme of our great country, Nigeria. 

Firstly, the study and its findings will contribute significantly to existing literature on the subject area. It will also stimulate further studies on assessment of pension reform agenda not only at the federal ministry of Interior, Anambra state, but in other tiers of government and nongovernmental establishments. 

Secondly, the dwindling performance of most pension reforms in the country, which hitherto have been associated with ineffective pension fund administrators would have been addressed. 

Thirdly, the study and its findings will be a guide to various levels of government and non-governmental establishments on what fixed percentage of their revenue to be kept with the Central Bank of Nigeria (CBN) to carter for pension need of their workers as a way of securing the future of the


Finally, the study and its findings will help our policy makers and the world as a whole in determining who gets what in future pension reform agenda.  


This study focuses on the Federal Ministry of Interior, Anambra State. Federal

Ministry of Interior formally known and addressed as Federal Ministry of

Internal Affairs has the following agencies under her; Prisons, Immigration, Customs, and National Identity Management Commission (NIMC).  Indeed, the staff of various departments and units stated above form the primary sources of information.  

In the course of carrying out this research a lot of difficulties were encountered. They include the difficulty in searching for available data, noncooperation attitude of some staff members of the ministry, low literacy level of some respondents, especially the junior workers constituted problems. Also, the management staf

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