A STUDY OF IMPACT AND IMPLICATION OF RESTRUCTURING THE NIGERIA PENSION SCHEME (A CASE STUDY OF ENUGU STATE)

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A STUDY OF IMPACT AND IMPLICATION OF RESTRUCTURING THE NIGERIA PENSION SCHEME (A CASE STUDY OF ENUGU STATE)

 

CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY:
A pension scheme is a planned program, which enable corporate organization to acquire and set aside fund to cater for the well being of their sta after retirement from active service. The scheme enables pension to benefits to be paid to the beneficiaries. It could be paid to retired employee, a widow or a disabled person. There are legal and administrative procedures and processes made to facilitate the realization of this objective in both to public and private sectors of our economy. Pension benefits are given for meritorious services to the organization. The scheme is classified into two parts:
(a) A non-funded plan where the fund is under the control of employer. This is where payment to retired employees are made directly from operations by the organization as they become due without accumulation of funds. This is obtainable in the public services system and
(b) Contributory plan – where the employees bears parts of the cost (i.e. employees pay some portion for example, 10% of their gross monthly income, while the employer pays 15% of the gross monthly income. Organizations specific in their pension plan, the number of years an employee has to service before he/she qualifies for pensions. In Nigeria, most organization currently allows a minimum of five and ten years for gratuity and pension respectively.
The organizations that run a pension fund scheme usually have a pension board, such as the local government sta
pensions board. There is also the Nigeria Social Insurance Trust Fund (NSITF), which now replaces the former national provident fund. This caters mainly for the needs of the private sector. When establishment pension plans through “retirement plans”, that qualify under the international Revenue Code, approval would be sought from the Joint Tax Board, so that the deductions would be tax-free. Those expected to run the contributory pension schemes are:
i. Every worker who is employed by a company incorporated or deemed to be incorporated under the Company and Allied Matters Decree (CAMA) 1990.
ii. Every workers employed by a partnership irrespective of the number of workers employed is not less than five including owners. The two types of pension scheme used in Nigeria are:
(a) The self-administered pension scheme, which is managed and administered by the trustee of the scheme. It is their responsibility to pay retirees their pension regularly and invest the balance surplus fund.
(b) The insured pension fund scheme is managed and administered by an underwriter on behalf of owners of the scheme i.e. the Board of Trustees.
The underwriters (actuaries) invest the contributory funds into some government bonds or gilt-edge securities, commercial stocks, and today, they are in real estate and transport services. They by this contribute to the economic development of the country; collect the principle contributions, while the fund continue to generate more money through multiplier concept

 

 

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A STUDY OF IMPACT AND IMPLICATION OF RESTRUCTURING THE NIGERIA PENSION SCHEME (A CASE STUDY OF ENUGU STATE)

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