Thesis Abstract

Retirement is a significant life event that marks the transition from the workforce to a period of reduced or no employment. One of the key financial aspects of retirement planning is accessing pension funds to provide income during retirement years. However, retirees often face challenges in accessing their pension funds, which can have significant implications for their financial well-being. This research project aims to explore the challenges faced by retirees in accessing their pension funds and to identify potential solutions to address these issues. The challenges faced by retirees in accessing pension funds can be attributed to several factors. One major challenge is the complexity of pension fund regulations and processes, which can be overwhelming for retirees to navigate. This complexity is often exacerbated by changes in legislation and policies governing pension funds, leading to confusion and delays in accessing funds. Additionally, retirees may encounter challenges related to communication with pension fund administrators, such as delays in responses to inquiries or lack of transparency in information provided. Another key challenge faced by retirees is the risk of pension fund mismanagement or fraud. Retirees may fall victim to scams or fraudulent schemes that promise high returns on their pension funds, leading to significant financial losses. Moreover, retirees may also face challenges related to the sustainability of their pension funds, such as inadequate savings or investments that do not generate sufficient income to support their retirement needs. Furthermore, retirees may face challenges in accessing pension funds due to health issues or cognitive decline, which can impact their ability to manage their finances effectively. This can result in delays or difficulties in accessing pension funds, leading to financial insecurity during retirement years. To address these challenges, it is essential to improve financial literacy among retirees to help them understand their pension rights and options for accessing funds. Providing clear and accessible information on pension fund regulations and processes can help retirees make informed decisions about their retirement savings. Additionally, enhancing communication channels between retirees and pension fund administrators can improve transparency and efficiency in accessing pension funds. In conclusion, the challenges faced by retirees in accessing pension funds are multifaceted and require a comprehensive approach to address. By identifying these challenges and implementing solutions to improve access to pension funds, retirees can better secure their financial well-being during retirement years.

Thesis Overview

INTRODUCTION

1.1     BACKGROUND OF THE STUDY  
     

 Retirement is a phase of life that every employee must reach whether prepared for or not. It is the point in time when an employee chooses to leave his or her employment permanently (which could be voluntary or involuntary), and generally coincides with the employee’s eligibility to collect retirement resources ranging from social security to company pensions, etc. It is an inevitable stage in someone’s life be it in the private or public service, it is a period in time whereby one’s effort in an organization and role as a paid worker ceases, (Agoro, 2009; Ahmed, 2007; Bassey & Asinya, 2008).

The Concept of pension could be said to be as old as man and his working environment. Even in primitive time man was inclined to put aside something in cash or in kind, but mostly in kind to take care of the rainy day. The rainy day also included old age. In modern times it is generally conceived as the sum of money paid regularly by employers to former employees who have retired from their service usually as a result of attaining a fixed age limit in service or due to other reasons like sickness, widowhood or disableness (Nyong & Duze, 2011).

World-wide, even in the most advanced economies of the world, like the United State of America (USA), United Kingdom (UK), and France, Pension administration and issues related to the treatment of the aged and the infirmed pose very deep and disturbing problems (Ahmad & Oyediran, 2013). The difference as observed by Kolawole (2003) between advanced societies and ours however is the sense that, the power of imagination, creative thinking and planning are brought to bear on complex social problems.

Workers generally whether those in the public or private sectors are expected to live comfortable life devoid of any form of dependency after their successful retirement from active service. Rabelo (2002) cited in Sule and Ezegwu (2009) argues that, the working lives of employees move continuously towards a certain direction i.e. from employment to growth to retirement. Some are fortunate to save enough money to take them through the retirement period or ―the rainy day‖ while a majority leave the service with little or no savings at all. Ideally, the governments and organizations need to identify a way of accommodating and adequately rewarding employees‘ past efforts through organized pension plans, so that, they can achieve the goals of their existence. This is often achieved through different retirement policies which include the defined Benefit (pay-as-you-go) scheme, the National provident fund scheme and the contributory pension scheme that is expected to be fully funded (Sule & Ezegwu, 2009).

The idea of pensions and its significance was supported by divergent schools of thought. These schools of thought according to Kantudu (2005) are: the contributory school of thought, non-contributory school of thought and the hybrid school of thought. The first school of thought, emphasizing on contribution is advocated by most accounting standards setting bodies as well as by scholars such as Campbell and Fieldstein (2001). The school of thought argued that should the employees contribute a certain percentage to the plan; the employee will be able to receive the entire or part of the benefits at retirement or in case of termination of appointment or dismissal. This is based on the principle of operational efficiency in computation and funding. According to Kantudu (2005) the second school of thought (the non-contributory) was.also advocated by some Accounting Standards setting bodies and scholars like McGill (1984) and Byrne (2003). According to this school of thought, employers alone should fund the pension asset. The belief of this school was that, the singular funding made by the sponsor encourages and attracts more qualified and dedicated employees into the organization. Under this arrangement, the benefit is defined by a formula and pension at retirement is paid either as a lump sum amount or as a life annuity. The third school of thought is the Hybrid School of Thought. According to this school, Pension funds are defined as a collective pension plans that benefit from some (but varying) risk sharing between participants and with the sponsors and usually offer guarantees and conditional indexation.

During retirement, a retiree public officerusually receives certain benefits in the form of gratuity and pension. Gratuity is the sum total lump paid to a worker on existing from the service either through withdrawal or retirement, while pension is the sum of annuity paid periodically, usually monthly to a public servant who disengages from service after attaining a specified age limit usually 60 years or 35 years of active service, (Ezeani, 2001; Ebosele, 2001). In other words, gratuity and pension are post-employment benefits. These benefits are designed to prevent a sudden sharp drop in the financial capacity and living standard of the worker as would happen with the stoppage of his monthly salary and allowances after disengagement. The lump sum or gratuity he is paid is meant to enable the retiree finance any post-retirement endeavour of his choice while the pension replaces the monthly salary the retiree gets while he was still in active serve, (Babasola, 2000).

In this way, the retiree having spent a substantial part of his productive life working to earn a living, can in his old age (that is, at retirement) sustain and maintain a standard of living comparable to what he was used to while in active service. It is based on this that most progressive government enact laws to back up their policies on employment, retirement and pension in both the public and private sectors of the economy. To Casey (2011) and Taiwo (2014), pensions as a form of social security against old-age poverty and other uncertainties have attracted great interest virtually everywhere in the world, both in developed, developing and under-developed countries. Therefore, this study focuses on the challenges faced by retirees in accessing pension funds in Ogun state, a case study of Abeokuta south LGA.

1.2     STATEMENT OF THE PROBLEM

One of the greatest challenges that face typical employees throughout their working life is life after retirement. Retirement concerns emotional, psychological, as well as financial challenges that workers have to prepare well ahead of time. The fact that retirement happens at old age, health is also an important consideration. In planning towards retirement however, most workers in the past that did not plan ahead of their retirement have many times blamed themselves for short-sighted vision. Today, with the failures experienced in the public sector pension schemes, there is a major paradigm shift amongst workers as how to manage their lives in retirement.

Some of the issues affecting the proper operations of the pension scheme includes: lack of accountability and transparency in the management of the contributed funds, fraud and irregularities, lack of annual auditing and publication of annual audit reports of the Trustees, illegal dissolution of the Trustees and the appointment of unqualified staff in the management Board of the Trustees contrary to the provisions of the Nigeria pension and gratuity law 2006.

Pension programmes, especially those that are publicly financed and administered, have become an issue of concern to economists, policymakers and the general public. This is not only because such programmes are central to the well-being of pensioners and the elderly, but also because the majority of pension programmes are not actuarially balanced (that is they are not financially stable) and as such, they are run at deficits, thus making the present values of their future liabilities to be enormous. In some countries, especially those that are economically advanced, pensions are usually extended to other categories of people apart from retirees, such as widows, orphans, disabled people (in the form of disability pensions), and the elderly or the aged. These problems necessitates the need to carry out a study on the challenges faced by retirees in accessing pension funds in Ogun state, a case study of Abeokuta south LGA.

1.3     OBJECTIVES OF THE STUDY  

The general objective of this study is to examine the challenges faced by retirees in accessing pension funds in Ogun state, a case study of Abeokuta south LGA. The specific objectives include the following:

1.     To find out if retirees in Abeokuta south LGA have issues in accessing their pension funds.

2.     To ascertain the roles of the government in the challenges faced by retirees in accessing pension funds in Abeokuta south LGA.

3.     To determine the level of funding of contributory pension scheme significantly affected the payment of retirement benefits in Abeokuta south LGA.

4.     To examine the extent to which compliance with the Contributory Pension Scheme law affects the payment of retirement benefits in Abeokuta south LGA.

5.     To investigate the influence of corruption on the challenges faced by retirees in accessing pension funds in Abeokuta south LGA.