Every assets leads the participants into the situation

Every society, whether embryonic or modern,
faces a number of problems to which reliable and workable solutions must be
provided. One of the challenges being faced by developing economies states which Nigeria
belongs, is the provision of better life to pensioners with the ultimate objective of
enhancing their wellbeing
and reducing their level of poverty (Ahmed & Salisu, 2010). One of the ways
of achieving this is through Pension Scheme. Nigeria reformed its pension
system due to many problems confronting both the public and private sectors.
The public sector operated largely as the Pay-As-You-Go scheme, which depends
on budgetary provisions from various tiers of government for funding. Under the
Defined Benefit (DB) Scheme, contributions were not generally made, and
projections were required to be made of the pension entitlements of each
employee by the employer, determined by the employee’s years of service and


The current shift in understanding of the modern trend on the subject
matter brought about the gradual move towards diverse pension arrangements
(either through individual accounts or collective schemes), where the future
pension provisions are backed by the assets. This trend is visible in many
countries around the world, where the new pension schemes have been established
in which Nigeria is not an exception. The key outcome of the processes just
described is the situation, in which a significant number of future pension
claims are becoming asset-backed. In this situation, a significant part of the
future pension provisions are becoming directly dependent on the future
discounted yields that are to be delivered by these assets. However, the
increased linkage between the levels of future pensions and the performance of
invested assets leads the participants into the situation when part of their
retirement income will be subject to the market uncertainties connected with
the investment process.

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Moreover, In
the same line of argument, the issue of how to manage pension provision and
old age support in both developed and developing countries is generating
attention. The World Bank’s 1994 report raised the outline of ageing as an issue in the
context of development policy, but within an unfortunate context of ‘crisis’
(World Bank, 1994). Although, the report recommended developing countries to
adopt multi-pillar pension systems, the Bank subsequently focused almost
exclusively on supporting the introduction of individual retirement savings
plan (World Bank, 1994).


Prior to the Pension Reform Act 2004, in Nigeria, most public
organizations operated a defined benefit (pay-as-you-go) scheme. Final
entitlements were based on length of service and terminal remunerations. The
Defined Benefit (DB) Scheme was funded by Federal Government through budgetary
allocation and administered by pensions Department of the Office of the Head of
Service of the Federation (Balogun, 2006).

The pension scheme became a great burden on the government, as it could
no longer cope with the payment of pension and gratuities to retiring
workforce. This is apparently due to the fact that there was no plan put in
place to forestall these challenges. Therefore, managing and administering
pension 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 of
pension scheme in Nigeria. Among the major challenges he cited includes
remittance 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 Pension
Commission as a sole regulator and supervisor of all pension matters in the
country (Pension Reform Act, 2004:1). Similarly for the first time in history,
Nigeria established a single regulatory body for the pension industry while the
scheme is managed by Pension Fund administrators and the Pension Fund
Custodians warehouse of the retirement benefits. This massive decision that
holds the future of retirees in public-private sectors requires a study for the
future of public and private services in the country.

Since the inception of the scheme in Nigeria by 2004, not much effort
has been made, especially by researchers to examine the management of the
scheme and other performance-related issues. It is therefore against this
backdrop that the study was conducted to examine the management of contributory
pension scheme in Nigeria. The major objective of this paper is to examine the
relationship between compliance and the management of contributory pension
scheme in Nigerian Public Service with a view to coming out with a better ways
of pension management in Nigeria. Therefore, compliance
with rules and regulations by operators does not affect the management of
Contributory Pension Scheme in Nigerian Public Service.


1.1       Conceptual

It is indispensable
to briefly touch on some important concepts that are deemed to be very relevant
to the study, so as to avoid ambiguity and ensure proper understanding of the
problem in question.

1.1.1    Concept of Management

In the words of Vishnoo and Vidya (2011),
management is the triumph
of predetermined objective through the efforts of other people. Fayol (cited in
Sharma, Sadana and Kaur, 2011) opined that management is a process that must be
carried out at all levels of organisation, and its main elements include
planning, organising, commanding, coordination and control among others. More broadly, management
refers to the process of designing as well as maintaining an environment in
which individuals, working as a group, efficiently accomplish individuals and
groups goals (Koontz and Weihrich 1990). It is against the above painted pictures that the concept of
management; as applied in this research; refers to the process of implementing
or administering of the new pension scheme in Nigeria.

1.1.2 Compliance: Conceptualization

PenCom (2009) defines compliance as the structure put
in place that requires
an organisation to comply with Laws, Rules and Regulations. Compliance in this
study refers to adherence to the provisions of the Pension Reform Act 2014,
including regulations, circulars, codes and guidelines issued by the Pension
Commission. It is the control mechanism put in place to ensure effective
management and safeguards pension funds and provide easy access to retirement
benefits by all retired workers, as at when due.


2          Material
and Methods

A survey design
was adopted for the study. The population of the study consisted of staff of
the National Pension Commission, Premium Pension Limited, First Custodian
Pension Limited and Ahmadu Bello University, Zaria Nigeria with a total number
of 11558 members of staff. To determine the sample size for the study, Krejcie and
Morgan’s (1970) table was used to arrive at 370. A Simple Linear Regression was
employed to analyse the data for the study using Statistical Package for the
Social Sciences (SPSS) version 20.

3          Results
and Discussion


instrument used for data collection for the study has gone through an internal
consistency test which measured the degree to which items that made up the
instrument were measuring the same underlying attribute. It measured the extent
to which the items in the instrument ‘hang together’. This means that
reliability test shows how the items in the instrument measure the construct
under study. Nunnally (1978) recommends a minimum of 0.70 Cronbach alpha.
However, the following are recommended and reliable Cronbach alpha
coefficients, 0.81-0.95 is a very good reliability, 0.71-0.80 is considered a
good reliability, 0.60 – 0.70 is considered fair. Therefore, this study adopts
0.70 thresholds as suggested by Nunnally (1978) in measuring the internal
consistency of the instrument. Below is the summary of the reliability test
results for all the variables.


Table 1.   
Summary of Reliability Analysis of Variables


No. of items

No. of items deleted

Cronbach’s alpha

Dependent Variable:
Pension Management




Independent Variable:




Field Survey, 2017.


1. Shows that the Cronbach’s alpha for pension management was 0.709, which
means that 70.9% of the items measure the construct. Also, the Cronbach’s alpha
for compliance was 0.501 which indicates that 50.1% of the items were good
measures of the construct. The coefficients for both dependent and independent
variables fall within the acceptable thresholds. Thus, the general reliability
of the instrument can be said to be good.


Table 2.




R Square

Adjusted R Square

Std. Error of the Estimate









 a. Predictors: (Constant), Compliance

b. Dependent
Variable: PMQ


The R Square for the study as
shown above (Table 2.) is 0.206. This indicates that 20.6% of the variability
in management of contributory pension scheme (dependent variable) has been
significantly explained by the independent variable under study. This means
that the independent variable can predict the dependent variable by 20.6% which
implies that compliance relationship accounts for 20.6% variance in management
effectiveness of the scheme.

Table  3. 


Sum of Squares


Mean Square






















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



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