Every society, whether embryonic or modern,faces a number of problems to which reliable and workable solutions must beprovided. One of the challenges being faced by developing economies states which Nigeriabelongs, is the provision of better life to pensioners with the ultimate objective ofenhancing their wellbeingand reducing their level of poverty (Ahmed & Salisu, 2010). One of the waysof achieving this is through Pension Scheme. Nigeria reformed its pensionsystem due to many problems confronting both the public and private sectors.The public sector operated largely as the Pay-As-You-Go scheme, which dependson budgetary provisions from various tiers of government for funding. Under theDefined Benefit (DB) Scheme, contributions were not generally made, andprojections were required to be made of the pension entitlements of eachemployee by the employer, determined by the employee’s years of service andearnings. The current shift in understanding of the modern trend on the subjectmatter brought about the gradual move towards diverse pension arrangements(either through individual accounts or collective schemes), where the futurepension provisions are backed by the assets.
This trend is visible in manycountries around the world, where the new pension schemes have been establishedin which Nigeria is not an exception. The key outcome of the processes justdescribed is the situation, in which a significant number of future pensionclaims are becoming asset-backed. In this situation, a significant part of thefuture pension provisions are becoming directly dependent on the futurediscounted yields that are to be delivered by these assets.
However, theincreased linkage between the levels of future pensions and the performance ofinvested assets leads the participants into the situation when part of theirretirement income will be subject to the market uncertainties connected withthe investment process. Moreover, Inthe same line of argument, the issue of how to manage pension provision andold age support in both developed and developing countries is generatingattention. The World Bank’s 1994 report raised the outline of ageing as an issue in thecontext of development policy, but within an unfortunate context of ‘crisis'(World Bank, 1994). Although, the report recommended developing countries toadopt multi-pillar pension systems, the Bank subsequently focused almostexclusively on supporting the introduction of individual retirement savingsplan (World Bank, 1994).
Prior to the Pension Reform Act 2004, in Nigeria, most publicorganizations operated a defined benefit (pay-as-you-go) scheme. Finalentitlements were based on length of service and terminal remunerations. TheDefined Benefit (DB) Scheme was funded by Federal Government through budgetaryallocation and administered by pensions Department of the Office of the Head ofService of the Federation (Balogun, 2006). The pension scheme became a great burden on the government, as it couldno longer cope with the payment of pension and gratuities to retiringworkforce. This is apparently due to the fact that there was no plan put inplace to forestall these challenges.
Therefore, managing and administeringpension funds have continued to pose a great challenge to government in Nigeria(Okoteni & Akeredolu, 2005). Further, Adejoh (2013)identified some of the major challenges surrounding the administration ofpension scheme in Nigeria. Among the major challenges he cited includesremittance of the benefits, genuineness of our pension fund administrators,staff capacity and inadequate legal framework to support implementation. The Nigerian Pension Act of 2004 established the National PensionCommission as a sole regulator and supervisor of all pension matters in thecountry (Pension Reform Act, 2004:1).
Similarly for the first time in history,Nigeria established a single regulatory body for the pension industry while thescheme is managed by Pension Fund administrators and the Pension FundCustodians warehouse of the retirement benefits. This massive decision thatholds the future of retirees in public-private sectors requires a study for thefuture of public and private services in the country.Since the inception of the scheme in Nigeria by 2004, not much efforthas been made, especially by researchers to examine the management of thescheme and other performance-related issues. It is therefore against thisbackdrop that the study was conducted to examine the management of contributorypension scheme in Nigeria. The major objective of this paper is to examine therelationship between compliance and the management of contributory pensionscheme in Nigerian Public Service with a view to coming out with a better waysof pension management in Nigeria.
Therefore, compliancewith rules and regulations by operators does not affect the management ofContributory Pension Scheme in Nigerian Public Service. 1.1 ConceptualIssuesIt is indispensableto briefly touch on some important concepts that are deemed to be very relevantto the study, so as to avoid ambiguity and ensure proper understanding of theproblem in question.1.1.1 Concept of ManagementIn the words of Vishnoo and Vidya (2011),management is the triumphof predetermined objective through the efforts of other people.
Fayol (cited inSharma, Sadana and Kaur, 2011) opined that management is a process that must becarried out at all levels of organisation, and its main elements includeplanning, organising, commanding, coordination and control among others. More broadly, managementrefers to the process of designing as well as maintaining an environment inwhich individuals, working as a group, efficiently accomplish individuals andgroups goals (Koontz and Weihrich 1990). It is against the above painted pictures that the concept ofmanagement; as applied in this research; refers to the process of implementingor administering of the new pension scheme in Nigeria.
1.1.2 Compliance: Conceptualization PenCom (2009) defines compliance as the structure putin place that requiresan organisation to comply with Laws, Rules and Regulations. Compliance in thisstudy refers to adherence to the provisions of the Pension Reform Act 2014,including regulations, circulars, codes and guidelines issued by the PensionCommission. It is the control mechanism put in place to ensure effectivemanagement and safeguards pension funds and provide easy access to retirementbenefits by all retired workers, as at when due.
2 Materialand MethodsA survey designwas adopted for the study. The population of the study consisted of staff ofthe National Pension Commission, Premium Pension Limited, First CustodianPension Limited and Ahmadu Bello University, Zaria Nigeria with a total numberof 11558 members of staff. To determine the sample size for the study, Krejcie andMorgan’s (1970) table was used to arrive at 370. A Simple Linear Regression wasemployed to analyse the data for the study using Statistical Package for theSocial Sciences (SPSS) version 20.3 Resultsand Discussion Theinstrument used for data collection for the study has gone through an internalconsistency test which measured the degree to which items that made up theinstrument were measuring the same underlying attribute.
It measured the extentto which the items in the instrument ‘hang together’. This means thatreliability test shows how the items in the instrument measure the constructunder study. Nunnally (1978) recommends a minimum of 0.70 Cronbach alpha.However, the following are recommended and reliable Cronbach alphacoefficients, 0.81-0.95 is a very good reliability, 0.71-0.
80 is considered agood reliability, 0.60 – 0.70 is considered fair. Therefore, this study adopts0.
70 thresholds as suggested by Nunnally (1978) in measuring the internalconsistency of the instrument. Below is the summary of the reliability testresults for all the variables. Table 1. Summary of Reliability Analysis of Variables Variables No.
of items No. of items deleted Cronbach’s alpha Dependent Variable: Pension Management 3 0 0.709 Independent Variable: Compliance 3 1 0.
501 Source:Field Survey, 2017. Table1. Shows that the Cronbach’s alpha for pension management was 0.709, whichmeans that 70.9% of the items measure the construct.
Also, the Cronbach’s alphafor compliance was 0.501 which indicates that 50.1% of the items were goodmeasures of the construct. The coefficients for both dependent and independentvariables fall within the acceptable thresholds. Thus, the general reliabilityof the instrument can be said to be good. Table 2.
ModelSummaryb Model R R Square Adjusted R Square Std. Error of the Estimate Durbin-Watson 1 .454a .206 .202 1.63740 1.800 a. Predictors: (Constant), Compliance b.
Dependent Variable: PMQ The R Square for the study asshown above (Table 2.) is 0.206. This indicates that 20.6% of the variabilityin management of contributory pension scheme (dependent variable) has beensignificantly explained by the independent variable under study. This meansthat the independent variable can predict the dependent variable by 20.6% whichimplies that compliance relationship accounts for 20.
6% variance in managementeffectiveness of the scheme. Table 3. ANOVAb Model Sum of Squares df Mean Square F Sig. 1 Regression 151.761 1 151.761 56.604 .000b Residual 584.
474 218 2.681 Total 736.234 219 a. Predictors: (Constant), Compliance b. Dependent Variable: PMQ The ANOVA table 3.
indicates that the model as a whole is significant,considering the Sig. F Change value (F (1, 218) = 56.604, p < .0005). Thelevel of significance is .000 which shows that the analysis of variance for thestudy has fallen within the acceptable standards. This shows that the model isgood and fit for the study.
Table 4. Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 3.961 .654 6.
054 .000 Compliance .529 .070 .454 7.
524 .000 a. Dependent Variable: Pension managementTable 4. shows that the independentvariable (compliance) has made a unique contribution in explaining the variancein the dependent variable (management) by 45.4%. The contribution isstatistically significant at p value = .000.
From table 4. above, the null hypothesiswhich states that ‘Compliance with rules and regulations byoperators does not affect the management of Contributory Pension Scheme inNigerian Public Service’,was rejected by the statisticalanalysis at level of significant (p) value = .000, and beta (?) coefficient =.
454, which implies that Compliance with rules and regulations byoperatorshas a significant impact on the management of contributory pension scheme inNigerian Public Service. This showsthat the independent variable (compliance) has made a unique contribution inexplaining the variance in the dependent variable (management) by 45.4%. Thecontribution is statistically significant at p value = .000. Thefindings of the study revealed that compliance with rules and regulations byoperators has positive but moderate relationship with the management ofcontributory pension scheme and was statistically significant in explainingvariability in the management of contributory pension scheme. The results showthat there was adequate enforcement of rules and regulations put in place bythe National Pension Commission for pension managers in Nigeria.
The controlmechanisms are in compliance with the international best practices foreffective pension management scheme. It was discovered that the controlmeasures have significantly helped in remittance and timely payment ofretirement benefits in most organizations. Similarly, it was found out thatmost organizations comply with the pension rules and regulations as enshrinedin the Pension Act.
The findings also confirm the findings of other scholars (Gunu & Tsado, 2012; Ebbinghaus & Whiteside, 2012, Dagauda and Adeyinka (2013). 4 Conclusion and RecommendationThe findings of the study revealed thatcompliance with rules and regulations by operators has positive relationshipwith the management of contributory pension scheme. Based on the findings, itwas concluded that there was adequate control mechanisms (rules andregulations) put in place by the National Pension Commission for pensionmanagers in Nigeria; that the control mechanisms are in compliance with theinternational best practices for effective pension management. The controlmeasures have significantly helped on timely payment of retirement benefits inmost organizations and that most of these organizations comply with the pensionrules and regulations as enshrined in the Pension Act.
Therefore,the study recommended that the National Pension Commission should institutestiffer control mechanisms (rules and regulations) in order to avoid delay inpension remittance. This will go a long way in checking indiscipline and abuseby Pension Fund Administrators, Pension Fund Custodians and Employers oflabour. Furthermore, the Commission should intensify enlightenment campaigns onthe operations and working system of the pension scheme as this has thepotential to enhance compliance with the rules and regulations.