CHAPTER ONE GENERAL INTRODUCTION
1.1 Background to the Study
Pension is benefit paid to an employee on retirement. It represents a reward for long duration of service and loyalty to an employer and it could be perceived as a deferred remuneration package. 1 The idea is to make employees financially independent during post-employment period. It is based on these realities that social security pension was conceived, particularly to essentially serve as tools for ensuring income security for women and men as they grow older.2 This income is necessary for the dignity and wellbeing of older persons, and imperative to realize their rights. The goal is to provide adequate, affordable, sustainable, and robust benefits after retirement. 3 By adequate it means, pensions should be able to replace sufficient lifetime earnings of retirement income in order to prevent old age poverty. The world is ageing very fast as the number of people aged 60 and over worldwide has been increasing at an unprecedented rate.4 The older population is growing faster than the total population in almost all the regions of the world5. In particular, the population of Africa is growing older faster, at a rate of 2.27 percent6. The percentage of those aged 60 years and over is projected to increase from 6 percent in 2012 to 10 percent in 20257. Similarly, in West Africa, it is projected to increase from 5 percent in 2012 to percent in 2025 and in Nigeria, from 5.3 percent in 2012 to 7.4 percent in 20258.
The international instruments adopted by the International Labour Organization (ILO) and the United Nations (UN) affirm that every human being has the right to social security. The ILO‟s Income Security Recommendation 67, for instance provides that social security should be afforded to all employed and self- employed9. Similarly, Article 22 of the Universal Declaration of Human Rights10 states that everyone as a member of a society has the right to social security in the event of old age. The same provision is found in Article 9 of The International Convention on Economic, Social and Cultural Rights.11 It goes without saying that the practical implementation of this right requires a major undertaking by the States.12 In Nigeria, the law regulating Contributory Pension Scheme is the Pension Reform Act13 The new Act establishes uniform rules, regulations and standards for administration of Contributory Pension Scheme for both the private and public sectors in Nigeria to ensure that every person who works in either the Public Service of the Federation, Federal Capital Territory, States and Local Governments or the Private Sector, receives retirement benefits as and when due.14 Essentially, the Act seeks to assist improvident individuals by ensuring contributors receive their benefits as and when due and to assist improvident individuals to save in order to cater for their livelihood during old age. 15 The Scheme is contributory, meaning that the employer and the employee contribute into the fund. Some of the features of the Contributory pension Scheme includes:
- it is contributory, and it is fully funded by the employees and employers.
- There is a private third party custodian of the funds.
- It has established a uniform method of a administering payments of retirements benefits in Public and Private Sector.
- It has flexible, as pension arrangement is not affected by change of employment by an employee.
