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Sahel Analyst: ISSN 1117-4668 Page 1
PERCEPTION OF THE DIFFERENCE BETWEEN RETIRED AND
SERVING EMPLOYEES IN OPENING SAVING ACCOUNT OR THE
TEMPORARY SAVINGS ON THE DEFINED CONTRIBUTORY
PENSION IN SOKOTO STATE
Nurudeen Bello Ahmed1
Abubakar Sambo Junaidu2
Abstract
This study is on the perception difference between retired and serving
Employees in Sokoto state on the Defined Contributory Pension Scheme
(DCP) in opening Retirement Savings Account (RSA) or the Temporary
Retirement Savings Account (TRSA). Employees of federal ministries,
departments and agencies (MDA’s) in Sokoto state served as the population
of the study. Multi-stage sampling technique was used to arrive at a sample of
735 respondents. The questionnaire was also used to solicit information from
the respondents. The DCP is the independent variable while the dependent
variable is the perception difference measured by employees’ possession of
the retirement savings account or the temporary retirement savings account.
Descriptive and inferential statistics were employed to present and analyse
the data. The study found that there is no significant difference between the
opinions of serving employees and retirees in terms of the opening of
Retirement Savings Account (RSA) or Temporary Retirement Savings Account
(TRSA). The study therefore recommended among others that RSA or TRSA
should be strictly observed by both employees and employers to ensure that
retirement savings are guaranteed after service years and that National
Pension Commission (PENCOM) should checkmate organisations that are yet
to abide strictly on the current policy and the Pension Reform Act 2014 as
amended and sanction them accordingly in order not to jeopardise the
scheme basic objectives of guaranteeing Retirement Savings at retirement.
Keywords: Retired and serving employees, Contributory pension scheme,
Retirement Savings Account, Temporary retirement savings account
Introduction
Retirement from the private and public service is undoubtedly one of
the areas of concern that governments in developing nations nowadays are
giving adequate attention to. According to World Bank (1994), there are
1 Department of Business Administration and Management, Umaru Ali Shinkafi
Polytechnic, Sokoto 2 Department Of Business Administration, Usmanu Danfodiyo University, Sokoto
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persistent and nagging concerns over the payment of retirement benefits in
quite a number of developing countries. World Bank (1994) further reveals
that the issue of pension has received much attention in many countries over
the past decades. In fact, in recent times, the pension has increasingly attracted
the attention of policymakers in many countries as a means of facilitating
privately funded retirement income saving by an aging workforce. In 2003,
President Olusegun Obasanjo reviewed the Old Act and introduced the
Contributory Pension Scheme (CPS) with a view to addressing the persistent
failure of pensioners to receive their pension benefit and a host of others.
Presumably, the Nigeria Pension Reform Act (PRA) (2004) would address
retirees’ sufferings in pursuing their entitlements and benefits.
The Pension Reform Act, (2014) makes provision that would compel
an employer to open a Temporary Retirement Savings Account (TRSA)
on behalf of an employee that failed to open a Retirement Savings Account
(RSA) within three months of assumption of duty. This was not required
under the 2004 Act. The New Pension Scheme is contributory, fully funded,
based on individual accounts that are privately managed by Pension Fund
Administrators with the Pension Fund Asset held by Pension Asset Custodians
and based on the good insurance policy (Sule & Ezeogwu, 2009). However,
Ahmed (2008), observed that since the implementation of the New
Contributory Pension Scheme, annual contributions to the Pension Funds in
the public sector has grown tremendously. There was a general improvement
in the level of pension compliance by employees and employers in both the
public and private sectors. Ahmed (2008) further reveals that the total fund
assets in the custody of Pension Fund Custodians (PFCs) have grown from
₦1630.36 billion by the end of 2011 to ₦2, 197.86 trillion as at December 31,
2012, which represented an increase of 34.81 percent ahead of 2011. The
breakdown further include ₦943.52 billion (42.93%) Retirement Savings
Account (RSA) assets, ₦589.24 billion (26.81%) Closed Pension Fund
Administrator (CPFA) assets, and ₦665.22 billion (30.27%) Approved
Existing Scheme (AES) assets.
Contributory Pension Scheme (CPS) introduced in Nigeria is
investment driven Bayero (2010); that is, the employer and employee
contributions into retirement savings account are to be invested by the PFA’s
in equities and bond markets, and interest or commission accruable to pension
assets remitted to contributors’ funds investment based on the stipulated
provision of the law. He further states that in order for the balance of the funds
to be readily invested in worthwhile projects, it will be desirable to have a
well-developed capital market. Unfortunately, the capital market is not fully
developed and pension funds may end up being invested only on a short-term
basis which usually implies low yields. Under the new pension regime, it is
likely that what retiree gets depends on whether he/she retires when the
market is up or down since accumulated pension funds are to be invested in
market instruments.
Perception of the Difference between Retired and Serving Employees in Opening Saving Account or the Temporary Savings on the Defined Contributory Pension in Sokoto State
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The Federal Government formulated policies about retirement from
time to time with a view to improving the lots of workers after serving in the
public or private sectors. These policies have to do with the age, duration of
service, pension, gratuity and administration of the pension schemes as
recommended by various committees and steering committees such as those
on harmonisation of public pension fund management in Nigeria, pension
reform committees and steering committee on pension reforms in public
enterprises in Nigeria (Akinade, 2006).
Many studies on pension were conducted around the world but very
few researchers were conducted in Nigeria such as Bayero (2010) on an
assessment of the viability of contributory pension scheme in the public
service in North Western Nigeria concluded that low contribution density,
lack of financial literacy, suspicion of pension fund administrators and
insurance companies and lack of mechanisms of coping with bankruptcy
largely undermine the viability of contributory pension scheme. The study
also recommends that contributions of employee and employer must be
enhanced, the confidence-building measure needs to be put in place to make
contributors trust the pension administration institutions among others. The
study failed to address the issue of contribution density adequately which
could not focus on the interest or commission accruable to pension assets that
form one of the bases of the existence of the defined contributory pension
scheme.
Ayegba & Isaiah (2013) evaluated pension administration in Nigeria in
order to examine the extent of compliance by the employer of labour in
funding the Retirement Savings Account (RSA) of their employees as a
needful requirement of the new contributory pension scheme in Nigeria. The
study concluded that a well-organised structure that will ensure prompt
payment of retirees and or pensioners is highly desirable and this must be
vigorously pursued by the government of Nigeria. Having or opening a
retirement savings account (RSA) or the temporary retirement savings account
(TRSA) as a pre-requisite for contribution in the new scheme signifies that it
is on the basis of opening a retirement savings account or the temporary
retirement savings account from inception that forms an employee or retirees’
existence or participation in the new scheme. This paper attempts to
investigate whether or not federal government employees actually opened
RSA or TRSA for contribution in the new scheme.
Research Questions
From the foregoing this study sets to investigate and answer the following
question:
i. Do serving employees and retirees in the Federal Government
Organisations (Ministries, Departments and Agencies) (MDA’s) have
any difference in opinion in terms of opening a Retirement Savings
Account (RSA) or Temporary Retirement Savings Account (TRSA)?
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Objectives of the Study
The general objective of this paper is to measure the perception
difference between employees and the retirees of the federal government on
the Defined Contributory Pension (DCP). This is what this paper sets to
investigate
Specific objectives include:
i. To examine whether there is a difference between the opinion of
serving employees and retirees in Federal Government Organisations
(Ministries, Departments and Agencies) (MDA’s) in the opening of the
retirement savings account (RSA) or temporary retirement savings
account (TRSA).
Research Hypothesis
Based on the research question and objective, this study develops the
following hypothetical statement to guide it.
HO: There is no significant difference between the opinion of serving
employees and retirees in the MDA’s in terms of opening temporary
retirement savings account (TRSA) or the retirement savings account (RSA).
Literature Review
Concepts of Retirement
Retirement signifies the detachment from primary activity in business,
industry or active service as a full-time employee (Akerlof & Katz, 1989). It
can also be conceptualised as a process that separates an individual from a job
role (Atchley, 1980) or as termination of a pattern of life and a transition
(Omoresemi, 1987; Bethel, 2005). The causes of the detachment or separation
may be due to age, poor health, social pressure or apathy.
Retirement is the point where people stop employment completely
(Wikipedia, 2011). In contrast to Elumelu (2005), a person may also semi-
retire by reducing work hours. Many people chose to retire when they are
eligible for private or public pension benefits, although some are forced to
retire where physical conditions do not allow the person to work anymore (by
illness or accident) or as a result of legislation concerning their position. In
most polity, the idea of retirement is of recent origin, being introduced during
the 19th
and 20th
centuries. Previously, low life expectancy and the absence of
pension arrangements meant that most workers continued to work until death
(OECD, 2005).
Retirement is just another phase of life. Felix, Peter & Willem (2007)
describes that society built on a work ethic, the move from a recognisable
productive work role on one day to a role-less role on the next, has stimulated
the belief that retirement heads to mental and physical illness and sometimes
premature death, to many, work is life and idleness is a living death. Thus, the
British Life Long Learning Minister, Mr. Malcolm Wicks was also quoted in
Eme & Sam (2011) saying that “You don’t stop thinking when you stop
working. I think of retirement as the new learning zone’’. Retirement means
Perception of the Difference between Retired and Serving Employees in Opening Saving Account or the Temporary Savings on the Defined Contributory Pension in Sokoto State
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different things to different people. To some it can be exciting, delightful,
thrilling, reading, something to look forward to, while to some it means the
end of the road, psychological, or living death.
Retirement does not mean the end of one’s world rather the beginning
of a new world or phase in life, a time one should be thankful to God for the
journey so far, for many look forward to retirement but not all get to it.
According to Fashoyin (1990) “Public Servants retiring on grounds of age
should be treated as war veterans and not dead woods to be burnt”.
To any Nigerian worker retirement is a dreadful experience and has
acquired a negative colour as retirees in Nigeria are passing through hardship.
To Eme et al (2011) many workers are regretting the day they joined the
public service because Fashoyin (1990) described public servants as not been
treated as war veterans but dead woods to be burnt. Olayiwola (2000) posits
that “in fact, the process of disengagement from active work-life is not an easy
one. Many have been faced with a lot of psychosomatic problems arising from
unpreparedness and the various forms of psycho phobic reactions often
exhibited by several workers in Nigeria”. Also Eme et al (2011) explains that
not many would know or understand what pensioners go through in the
nation, the punishment is such that to retire to a quiet life and honest life has
almost been made impossible in Nigeria, so brutal, heartless, and imposed on
waiting for pensioners that some prefer to die instantly rather than go through
the headache of receiving their pension.
Concepts of Pension and Gratuity
In most cases, the pension is hardly mentioned in seclusion to
“gratuity”. Gratuity is a once and for all money paid to an employee on
retirement, upon death or retirement or on total incapacitation while at work
as posited by Nwajiagu (2007), in some cases, workers are only entitled to
gratuity upon withdrawal of service, and in others: they may be entitled to
both gratuity and pension. But in all cases, a worker who is qualified to
receive pension is usually also entitled to the payment of gratuity. Even if he
is indebted to the organisation at the time of retirement, he is still qualified
unless he was specifically dismissed without benefits based on misconduct.
Robelo (2002) asserted that pension is the method whereby a person
pays into pension scheme a proportion of his/her earnings during his working
life. The contributions provide an income (or pension) on retirement that is
treated as earned income. This is taxed at the investors’ marginal rate of
income tax; while on the other hand, gratuity is a lump sum of money payable
to a retiring officer who has served for a minimum period of time. A greater
importance has been given to pension and gratuity by employers because of
the belief that if employees’ future needs are guaranteed, their fears
ameliorated and properly taken care of, they will be more motivated to
contribute positively to organisation’s output. Similarly, various government
organisations, as well as labour unions, have emphasised the need for sound,
good and workable pension scheme.
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Evidence from Nigeria
In Nigeria, the history of the new contributory pension scheme cannot
be discussed in total seclusion from the entirety of pension schemes and the
various stages of evolution passed through. Fapohunda (2013) maintained that
pension is traced first with the English and Spanish Governments in 17th
century purposely paid to Veterans, Military personnel especially with regards
to disability and survivour benefit, then a naval pension was set up in the
United States before it was ratified in its Constitution in 1787 and became
desirous across the world that Nigeria is no exemption in this trend.
The development of pension system in Nigeria, particularly from the
1970s in the Public Sector, including civil and public services, statutory
bodies and government-owned companies were governed by the Pensions Act
of 1979, later the Pensions Act 1990, amended by the Pensions Regulations of
1991.The Act provided for benefits in terms of gratuity and pension payments
and later concludes that scheme was a compulsory and non-contributory one,
which created a right to the monetary collection by public servants and an
obligation on the part of the government to make payment.
Pension System
Until the government of Chief Olusegun Obasanjo in 2003 deemed it
wise and decided to effect change in the way pension was being administered
in Nigeria, Pensions was mandatory in the public sector but optional in private
sector. It is important to note also that, the Federal Government particularly
public service operated an Unfunded Non-Contributory Pension scheme called
the Defined Benefit Pay-As-You-Go (“PAYG”) Scheme (PENCOM, 2008).
In this system, the government taxes active workers to pay for the
benefits of retired workers. Under such system, retirement benefits are a
function of the rate of growth of the tax base, which in turn depends on the
rate of growth of the labour force and the rate of growth of real wages per
worker. Differently put, the retirees may or may not receive their benefits
depending on whether or not their employer has sufficient cash resources to
make payment at that time. Under the Act that established the Pay-As-You-
Go- scheme, the pension or gratuity granted to retirees was on a basis of final
pay and the sums were made chargeable to a consolidated revenue fund of the
federation (Fapohunda, 2013).
Following the negative trend that existed in the Old Pension System,
led to the emergence of the Pension Reform Act (2004) (Contributory Pension
Scheme) also referred to as the defined contribution pension (DCP) which
stipulates that the new scheme is contributory, fully funded based on
individual accounts that are privately managed by Pension Fund
Administrators with the pension funds’ Assets, held by Pension Fund
Custodians. This process is strictly regulated with the aim of achieving the
following objectives
i. Ensuring that every person who has worked in either the public or private
sector receives retirement benefits as and when due.
Perception of the Difference between Retired and Serving Employees in Opening Saving Account or the Temporary Savings on the Defined Contributory Pension in Sokoto State
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ii. Assisting improvident individuals by ensuring that they save to cater for
their livelihood during old age or retirement period.
iii. Establishing a uniform set of rules and regulation for the Administration
and payment of retirement benefits in both the public and private sector,
and
iv. Stemming the growth of outstanding pension liabilities
The Defined Contributory Pension (DCP) 2004 highlighted the scheme
funding pattern, individual operational accounts and management of funds,
functions and roles of the pension fund administrators (PFA’s), pension fund
custodians (PFC’s), eligibility for the scheme and those exempted. It also
includes safeguards for the pension scheme, separation of pension fund
administrators and custodians, pension funds custodian guarantee, government
pension contribution, risk rating institutions, compliance officers, reporting
requirement for pension fund administrators and custodians, statutory reserve
fund, sanction, public disclosure of information, benefits and the role of
National Pension Commission (PENCOM) were also highlighted and
observed to be fundamental (PRA, 2014, as Amended).
Theoretical Framework
Under this study, the paper adopts Differed Wage Theory as its
theoretical framework that firms offer pension plans because of economies of
scale in administrative, portfolio management and other costs. The employer
receives cash flow benefits to the extent that the present value of deferred
wages exceeds the required funding. Logue (1979), Salop & Salop (1976)
posits that deferred wage theory generally incorporates a long-term or lifetime
implicit labour contract between the employer and employee that have various
implications for the employer and that it suggests that the delayed vesting of
pension plans may decrease employee turnover costs. Becker (1964) suggests
that firms that have an incentive to expand training costs as a result of delayed
vesting could cause “average” employee to work longer for the company,
resulting in a greater payback of these training costs.
Since this theory postulates that firms offer pension plan based on
economies of scale in the administration, portfolio management and other
costs, it could be described as a difference in perception between employers
and retirees as reported in Becker (1964) that firms that have an incentive to
expand could invest for employee to benefit from entitlement after additional
payback at retirement.
Methodology
The entire federal government employees in Sokoto state constitute the
population of the study. The federal organisations in Sokoto state are the
Ministries, Departments and Agencies (MDA’s). The total number of federal
MDA’s in Sokoto state is 85 with 57 federal Ministries, 14 federal
Departments and 15 federal Agencies in Sokoto state (FCC Bulletin, 2014).It
is practically impossible to reach all employees in federal organisations
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serving in Sokoto State and therefore makes sampling inevitable. There were a
total number of 7350 federal government employees serving in the federal
ministries, departments and agencies in Sokoto State (FCC Bulletin, 2014),
while a sample of 735 constituting 10%, of the total population was selected
across the MDA’s serving the state. The justification for selecting 10% was
based on Nwana (1981) suggestions that if a population is a few hundred, a
40% or more sample suffices, if many hundreds 20%, while several thousand
10% or more samples. Therefore, this study adopts 10% of the population
thus: 10/100 x 7350 = 735
This research adopts a multi-stage sampling method i.e. purposive,
stratified, and random sampling technique. The purposive sampling method
was used because the study focuses on existing and retired employees in
federal MDA’s in Sokoto state. The stratified method was also adopted
because the employees work in the different federal organisation and belong
to different cadres as junior staff or senior staff, while random sampling was
used in selecting respondents in each MDA’s. However, a total of 614 copies
of the questionnaire administered were returned and therefore 614 respondents
were used in the study. This includes responses generated from 514 returned
sampled copies of the employee respondents and 72 copies from the retiree
respondents.
For the purpose of this research, data was gathered from one major
source which is the primary source. The primary source of data collection of
this study is the questionnaire which was administered to the respondents.
Two types of questionnaire were used targeted at serving employees and
retirees.
Presentation of Data and Analysis
In this section, the paper uses tables and percentages to elicit
information for the analysis from both the employees and the retirees, thus;
Responses from the Employees
Table 1: Acceptance and Support for Contributory Pension Scheme
TYPE OF ORGANISATION
RESPONSE MINSTRY DEPARTMENT
S
AGENCIES TOTAL
FREQ % FREQ % FREQ % FREQ %
Strongly agree 28 7.6 2 2.4 12 13.3 42 7.7
Agree 156 42.4 28 33.3 36 40.0 220 40.6
Uncertain 44 12.0 16 19.0 10 11.1 70 12.9
Disagree 110 29.9 36 42.9 28 31.1 174 32.1
Strongly
disagree
30 7.6 2 2.4 4 4.4 36 6.6
Total 368 100.0 84 100.0 90 100.0 542 100.0
Source: Field Work, 2015
Perception of the Difference between Retired and Serving Employees in Opening Saving Account or the Temporary Savings on the Defined Contributory Pension in Sokoto State
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The extent to which new pension scheme was found acceptable by the
employees is presented in Table 1. It shows that majority of the respondents
supports the introduction of the new pension scheme amongst public servants
in accessing benefits after retirement. The responses from the organisations
show that majority of the respondents in the Ministries representing 184
(about 50%) agreed and strongly agreed respectively in the support of the
New Contributory Pension Scheme which may likely allow public servants in
accessing benefit after retirement while 44(12%) respondents were uncertain
about it.
However, 140 (38%) of the 368 respondents disagreed and strongly
disagreed respectively that the introduction of the New Contributory Pension
is not likely to make it easy for public servants in accessing benefit after
retirement.
On the side of Departments 30 (38%) of the 84 respondents strongly
agreed and disagreed respectively. Furthermore, 16 (19%) of the respondents
were uncertain. However, 38 (about 45%) of the respondents disagreed and
strongly disagreed with this assertion that the CPS does not secure or provide
a safeguard for public servants in accessing benefits after retirement. For the
respondents in the Agencies, 48 (about 53%) strongly agreed and agreed
respectively that the new pension scheme is absolutely suitable and more
secure for public servants in accessing benefits after retirement while only a
few of them i.e. 10 (11.1%) were uncertain. On the other hand, 28 (31%)
respondents disagreed and 4 (4.4%) respondents strongly disagreed that the
introduction of the new pension scheme could not guarantee the security of
public servants in accessing benefit after retirement. Thus, out of the total of
542 respondents across the MDAs, the majority of them (262) representing
about 48% was of the opinion that the New Pension Scheme could be a
saviour in accessing retirement benefit. Consequently, accepting the new
scheme is a policy that must be observed irrespective of one’s interest in the
scheme. This shows a clearly that since it a law then it must be observed.
Table 2: Whether New Pension Scheme Safeguard Accessing Benefit after Retirement
TYPE OF ORGANISATION
RESPONSE MINISTRIES DEPARTMENTS AGENCIES TOTAL
FREQ % FREQ % FREQ % FREQ %
Strongly agree 8 2.2 0 0.0 0 0.0 8 1.5
Agree 244 66.3 50 59.5 60 66.7 354 65.3
Uncertain 26 7.1 10 11.9 16 17.8 52 9.6
Disagree 72 19.6 22 26.2 14 15.6 108 19.9
Strongly disagree 18 4.9 2 2.4 0 0.0 20 3.7
Total 368 100 84 100 90 100 542 100
Source: Field Work, 2015
Table 2 shows that majority of the respondents across Ministries,
Departments and Agencies were of the opinion that the CPS will safeguard
accessing benefit after retirement. This information is further disaggregated
showing that most respondents from the Ministries representing 244 (about
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66%) agreed that the CPS seem more comfortable to them while 8 (about 2%)
of the respondents strongly agreed that it is as well comfortable because it
safeguards accessing benefits after retirement.
Surprisingly, 26 (about 7%) of the respondents were not sure of its
ability to safeguard access to benefits after retirement while 72 (20%) of the
respondents disagreed. Only, 18 (5%) of the respondents strongly disagreed
that the CPS is not likely to safeguard retirees to have access to their benefits
after leaving service. In the Departments, no respondent strongly agreed with
this assertion while a total of 50 (60%) respondents agreed to it. More so, 10
(12%) of the respondents were uncertain while 22 (26.2%) respondents
disagreed and 2 (2.4%) respondents strongly disagreed that the NCPS do not
safeguard retiree access his/her benefit after retirement.
Unlike the Departments, in the Agencies, no respondent strongly
agreed and strongly disagreed with the assertion respectively while 60(67%)
of the respondents agreed that the CPS safeguard accessing benefit after
retirement. However, 14 (16%) respondents disagreed while 16 (18%) of the
respondents were uncertain to the assertion. The result affirms that federal
civil servants have confidence in the Contributory Pension Scheme.
Respondents were also enquired about how long it took them to open the
TRSA or the RSA. The following responses were received as shown in Table
3
Table 3 Period under which RSA was opened
TYPE OF ORGANISATION
RESPONSE MINISTRIES DEPARTMENTS AGENCIES TOTAL
FREQ % FREQ % FREQ % FREQ %
1 – 3 month 120 32.6 16 19.0 30 33.3 166 30.6
4 – 6 month 32 8.7 6 7.1 0 0.0 38 7.0
1 – 3 years 56 15.2 12 14.3 20 22.2 88 16.2
4 years and
above
160 43.5 50 59.5 40 44.4 250 46.2
Total 368 100 84 100 90 100 542 100
Source: Field Work, 2015
The period under which retirement savings account RSA was opened
by respondents is presented in Table 3. The result shows that majority of the
respondents started operating their retirement savings account for over 4 years
and above representing about 250 (about 46%) of the total respondents. In the
case of Ministries, majority of the respondents started operating their RSA for
over 4 years and above representing about 44% followed by the respondents
in the Ministries have opened their retirement savings account for 1and 6
months while only a few respondents (32) representing 9% of the respondents
took 4 to 6 months to open their account.
In the case of Departments, the majority of the respondents opened
their RSA over 4 years and above representing about 60% of the respondents
while very few of them (6) representing about 7% did it within the period of 4
to 6 months. Finally, the majority of the respondents in the Agencies i.e 40
Perception of the Difference between Retired and Serving Employees in Opening Saving Account or the Temporary Savings on the Defined Contributory Pension in Sokoto State
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representing about (44%) opened their RSA for over 4 years and above while
none of the respondents open it between 4 and 6 months ago. This shows that
the federal civil servants immediately started to open their accounts when the
policy was introduced. The explanation for having about 31% of the total
respondents of 542 to have opened their accounts within the last 1-3 months
might have been that the respondents joined the civil service recently not
because they intentionally refused to open the account early when CPS was
introduced.
Again, the study found that most of the respondents as indicated in
Table 3 opened their RSA after at least a year. It implies that there is a
problem lingering behind opening RSA either from the employers or from the
employees. This concurs with the findings of Ojonugwa et al. (2013) that
there was a concern with the way and manner employers treat the employee in
the management of the Retirement Savings Account (RSA) or the Temporary
Retirement Savings Account (TRSA). This shows that there is perhaps
lackadaisical behaviour by an employer in the opening of TRSA for an
employer who could not secure his/her RSA on time. Base on the
disaggregated results in Table 3 which shows that employees working with
the Ministries were the most affected. On the question of whether employees
have TRSA before RSA, results are given below:
Table 4: Employee have TRSA before getting RSA
TYPE OF ORGANISATION
RESPONSE MINISTRIES DEPARTMENTS AGENCIES TOTAL
FREQ % FREQ % FREQ % FREQ %
Strongly agree 22 6.0 2 2.4 2 2.2 26 4.8
Agree 136 37.0 34 40.5 38 42.2 208 38.4
Uncertain 26 7.1 6 7.1 10 11.1 42 7.7
Disagree 154 41.8 38 45.2 30 33.3 222 41.0
Strongly
disagree
30 8.2 4 4.8 10 11.1 44 8.1
Total 368 100 84 100 90 100 542 100
Source: Field Work, 2015
On the issue of having TRSA before RSA, Table 4 shows that most of
the respondents were against opening a Temporary Retirement Savings
Account (TRSA) before opening Retirement Savings Account as indicated by
222 (41%) of the respondents. Results from Ministries shows that 22 (6%)
respondents strongly agreed that an employee who secures job should have a
TRSA before getting RSA while 136 (37%) respondents simply agreed. Again
in the Ministries, 26 (7.1%) of the respondents were uncertain while 154
(42%) of the respondents disagreed and 30 (8.2%) respondents strongly
disagreed. In the Departments, 2 (2.4%) respondents strongly agreed, 34
(41%) respondents agreed, 6 (7.1%) respondents were uncertain, 4 (5%)
strongly disagreed and 38 (45.2%) of the respondents disagreed. In the case of
Agencies, 2 (2.2%) of the respondents strongly agreed, 38 (42.2%) agreed, 10
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(11.1%) of the respondents each were uncertain and strongly disagreed
respectively and 30 (33.3%) respondents disagreed.
These results implied that there were mixed feelings about whether it
was appropriate to open TRSA before RSA. Most of the respondents across
the MDAs representing about 49% of the total respondents of 542 disagreed
and strongly disagreed with the assertion that employee who secures job
should have a TRSA before getting RSA.
The pension law requires that the monthly pension benefit should be
paid directly into the respondent’s retirement savings account. The study
solicited information from the respondents to know whether they are
comfortable with that requirement. Table 5 presents their responses.
Table 5: Distribution of Respondents on Pension benefit be paid directly to the RSA
TYPE OF ORGANISATION
RESPONSE MINISTRIES DEPARTMENTS AGENCIES TOTAL
FREQ % FREQ % FREQ % FREQ %
Strongly agree 62 16.8 8 9.5 18 20.0 88 16.2
Agree 206 56.0 48 67.1 52 57.8 306 56.6
Uncertain 10 2.7 8 9.5 6 6.7 24 4.4
Disagree 78 21.2 16 19.0 8 8.9 102 18.8
Strongly
disagree
12 3.3 4 4.8 6 6.7 22 4.1
Total 368 100 84 100 90 100 542 100
Source: Field Work, 2015
Table 5 reveals responses on whether monthly pension benefit should
be paid directly into the respondent’s retirement savings account in line with
Federal Government Policy. The table shows that majority of the total
respondents as indicated by 306(57%) supported that it should be paid directly
into the RSA while 102 (19%) opposed it. From Table 5, results across the
MDAs revealed that only a few respondents opposed the idea that monthly
pension benefit should be paid directly into their retirement savings account
(RSA) in line with Federal Government Policy. For instance, only 20 (24%)
respondents out of the 84 respondents from the Departments opposed the idea.
Again, the study found that most of the respondents supported the idea
that pension benefits be paid directly into RSA. This finding agrees with the
finding of Bayero (2010) that the essence of the contributory pension scheme
is to establish a guarantee having to protect benefits against risk. The study
also found that there was constant notification of pension contribution which
conforms to the requirement of section 2 (b) of the PRA 2004 and section 4
(1a).
Response Analysis from Retirees
The study also solicited information from retired civil servants on the
New Pension Scheme. The study started by investigating their marital status to
determine the extent to which their burden concerning family responsibility.
The analysis is therefore based on 52 respondents from the Ministries, 4 from
Perception of the Difference between Retired and Serving Employees in Opening Saving Account or the Temporary Savings on the Defined Contributory Pension in Sokoto State
Sahel Analyst: ISSN 1117- 4668 Page 13
the Departments and 16 from the Agencies making a total of 72 respondents
across the MDAs.
Table 6: Retirement Status
RESPONSE MINISTRIES DEPARTMENTS AGENCIES TOTAL
FREQ % FREQ % % FREQ %
Attain. of Ret.
Age
48 92.3 4 100.0 100.0 68 94.4
Voluntary Ret. 4 7.7 0 0.0 0.0 4 5.6
Total 52 100.0 4 100.0 100.0 72 100.0
Source: Field Work, 2015
This reaffirms the result revealed in Table 6 that most of the
respondents retired on grade level 07-09 because of age limit. The retirement
status of retirees from Ministries, Departments and Agencies is also presented
in Table 6. The table shows that most of the retirees (48) representing about
92.3% from Ministries retired because of attainment of the retirement age
while only 4 of them did voluntary retirement. Interestingly, all the retirees
from Departments and Agencies retired due to the attainment of retirement
age in service as indicated by all the 4 retirees from Departments and all the
16 retirees from Agencies. These results disclose that most of the retirees from
Ministries, Departments and Agencies complied with the retirement age in
line with federal civil service rule.
In order to be sure that all the respondents are participants in the
Contributory Pension Scheme, the study solicited information on the type of
scheme respondents operate.
Table 7: Pension Scheme Operated
TYPES OF ORGANISATION
RESPONSE MINISTRIES DEPARTMENTS AGENCIES TOTAL
FREQ % FREQ % FREQ % FREQ %
Contributory 52 100 4 100.0 16 100.0 72 100
Non contrib. 0 00 0 0.0 0 0.0 0 0
Total 52 100.0 4 100.0 16 100.0 72 100.0
Source: Field Work, 2015
Table 7 shows that all the retiree respondents (72) representing 100%
were participants in the New Pension Scheme, 2004. This implies that retired
employees who have served in the federal civil service operated solely under
the Defined Contributory Pension Scheme.
African Journal of Management (Vol.2, No.1, 2017), Business Admin. University of Maiduguri
Sahel Analyst: ISSN 1117-4668 Page 14
Table 8: Period Spent After Retirement before Accessing Retirement Benefits
TYPE OF ORGANISATION
RESPONSE MINSTRY DEPARTMENTS AGENCIES TOTAL
FREQ % FREQ % FREQ % FREQ %
1 - 2 months 16 30.8 0 0.0 12 75.0 28 38.9
3 - 4 months 12 23.1 0 0.0 4 25.0 16 22.2
5 - 6 months 12 23.1 0 0.0 0 0.0 12 16.7
6 months &
above
12 23.1 4 100.0 0 0.0 16 22.2
Total 52 100.0 4 100.0 16 100.0 72 100.0
Source: Field Work, 2015
The Table 8 indicates that with the CPS, 28 (39%) of the total
respondents were able to access their retirement benefits within 1-2 months of
retirement, 16 (22.2%) respondents accessed their benefits between 3 and 4
months, 12 (17%) got theirs between 5 and 6 months while 16 (22.2%) of the
respondents received their retirement benefits after 6 months and above.
Responses from the Ministries show that only a few of the respondents
representing 16 (31%) of the 52 respondents received their pension benefits
after 1 to 2 months while other respondents collected their own between 3
months and above. This shows that most of the retirees were able to collect
their retirement benefits between the periods of 3 months and above. In actual
facts, 28 (31%) respondents waited for more than 4 months before collecting
their benefits. This phenomenon is really not inspiring because that was one of
the problems of the old scheme which spent years to access their retirement
benefits. Maybe the possible explanation for the delay would be the
bureaucratic bottleneck associated with the release of funds by the PFAs.
In an attempt to find out if beneficiaries of the CPS are satisfied with
the Federal Government’s decision that all pension contributions should be
paid directly into RSA, the respondents were asked to state their opinion on
whether they agree or disagree with the decision as presented in Table 9.
Table 9: Pension Payment be made directly into RSA
TYPE OF ORGANISATION
RESPONSE MINISTRIES DEPARTMENTS AGENCIES TOTAL
FREQ % FREQ % FREQ % FREQ %
Strongly satisfy 4 7.7 0 0.0 4 25.0 8 11.1
Satisfy 48 92.3 4 100.0 4 25.0 56 77.8
Uncertain 0 0.0 0 0.0 4 25.0 4 5.6
Dissatisfy 0 0 0 0.0 0 0 0 0
Strongly
dissatisfy
0 0.0 0 0.0 4 25.0 4 5.6
Total 52 100.0 4 100.0 16 100.0 72 100.0
Source: Field Work, 2015
Table 9 shows that almost all the respondents indicated that they were
satisfied with the policy of payment pension contribution directly into RSA.
This is indicated by 56 (78%) of the total respondents and 8 (11.1%) of the
respondents were strongly satisfied with the policy while 4 (6%) of the
Perception of the Difference between Retired and Serving Employees in Opening Saving Account or the Temporary Savings on the Defined Contributory Pension in Sokoto State
Sahel Analyst: ISSN 1117- 4668 Page 15
respondents were indifferent. Only 4 (6%) of the respondents indicated that
they were strongly dissatisfied with the payment method. Thus, only a few
respondents 4(6%) who retired from the Agencies displayed their
dissatisfaction with the policy of paying directly the pension contributions into
RSA.
The respondents were also requested to state their opinion on whether
they are aware of the amount contributed into RSA before their retirement.
Table 10 shows their responses. It indicates that most of the respondents (36)
representing 50% of the respondents agreed to be aware of the total amount
contributed before retirement while 8 (.11.1%) disagreed.
Table 10: Awareness of the amount contributed to the RSA TYPE OF ORGANISATION
RESPONSE MINISTRIES DEPARTMENTS AGENCIES TOTAL
FREQ % FREQ % FREQ % FREQ %
Strongly
agree
8 15.4 0 0.0 4 25.0 12 16.7
Agree 36 69.2 0 0.0 0 0.0 36 50.0
Uncertain 8 15.4 0 0.0 8 50.0 16 22.2
Disagree 0 0.0 4 100.0 4 25.0 8 11.1
Strongly
disagree
0 0 0 0 0 0 0 0
Total 52 100.0 4 100.0 16 100.0 72 100.0
Source: Field Work, 2015
Table 10 also shows the results from Ministries that a large number of
retirees (36 or 69.2%) agreed that they knew the total amount of their
contributions before retirement while the respondents in the Departments and
Agencies representing 8 (11.1%) said they did not have knowledge of the
amount they have contributed in their RSAs before retirement.
The implication of these descriptive results indicates that since
employees and retirees must open a retirement savings account or the
temporary retirement savings account as a policy of government prior to
retirement justifies client’s active participation on the scheme as prerequisite
to enjoy retirement benefits as well as guarantee accessibility to the retirement
benefits irrespective of any condition of service while on employment.
Test of Hypothesis
Under this study, the test of the hypothesis result is as follows;
H0: There is no significant difference between the opinion of serving
employees and retirees in the MDA’s in terms of opening temporary
retirement savings account (TRSA) or the retirement savings account (RSA).
Tables 11 and 12 feature descriptive statistics and the Independent
Samples Test, the descriptive statistics provides basic information about the
group comparisons, including the sample size (n), mean, and standard.
African Journal of Management (Vol.2, No.1, 2017), Business Admin. University of Maiduguri
Sahel Analyst: ISSN 1117-4668 Page 16
The t-Test scores showed that there were 548 respondents who are serving
employees and 72 retirees while the mean of serving employees and retirees in
the MDA’s in terms of opening temporary retirement savings account (TRSA)
or the retirement savings account (RSA) score was 3.87 and 3.78 respectively.
The two-tailed p-value associated with this test as reported in Table 12 was
0.33. The t-Test failed to reveal a statistically significant difference between
the mean scores serving employees (M = 3.87, s = 0.73) and that of retirees
(M = 3.78., SD = 0.79), t (612) = 1.02, p = .33, α = .05. It can be observed that
the p-value of 0.33 is greater than 0.05 level of significance set for the study.
It can, therefore, be concluded that there is no significant difference between
the opinion of serving employees and retirees in the MDA’s in terms of
opening temporary retirement savings account (TRSA) or the retirement
savings account (RSA).
Decision Rule: Based on the results of the t-test analysis, the null
hypothesis which states that there is no significant difference between the
opinion of serving employees and retirees in the MDA’s in terms of opening
temporary retirement savings account (TRSA) or the retirement savings
account (RSA), is accepted.
Findings
The study found that there was no significant difference between the
opinions of serving employees and retirees in terms of the opening of the
retirement savings account or the Temporary Retirement Savings Account.
Conclusion
The major conclusion is that the defined contributory pension scheme
is brighter since employee and employers generally accepted that RSA or
Participants N Mean Std.
Deviation
Employees 542 3.87 0.73
Retirees 72 3.78 0.79
Table 4.40: Descriptive Statistics
Opinion of Serving
Employees & Retirees
onTRSA or RSA
Source: Author’s Computation (2017) Using SPSS Version 21
Equal variances assumed 2.21 0.14 1.02 612 0.33
Equal variances not assumed 0.97 87.94 0.34
Opinion of Serving
Employees &
Retirees on TRSA or
RSA
Source: Author’s Computation (2017) Using SPSS Version 21
Table 4.41: Independent Samples Test for the scores of Employees and Retirees onTRSA or RSA
Levene's Test for
Equality of Variances
t-test for Equality of Means
F Sig. t df Sig. (2-tailed)
Table 11: Descriptive Statistics
Table 12: Independent Samples Test of Retirees on TRSA or RSA
Perception of the Difference between Retired and Serving Employees in Opening Saving Account or the Temporary Savings on the Defined Contributory Pension in Sokoto State
Sahel Analyst: ISSN 1117- 4668 Page 17
TRSA is of major importance in the administration of pension funds and that
there is no significant difference between the opinion of employees and
retirees in the opening of RSA or TRSA. This may not be unconnected with
the fact that RSA or the TRSA stand as the key and of major importance in the
administration of the defined contributory pension generally. Similarly, this
signifies that the basis for ones’ existence as an employee particularly in the
federal establishments lies on his participation in the scheme.
Recommendations
Since contributory pension scheme is built upon employer and
employee contribution into retirement saving account, differences in opinions
have emerged between serving employees and retirees in opening of retirement
savings account or the temporary retirement savings account hence, retirement
savings account or the temporary retirement savings account should be strictly
observed by both employers and the employees to ensure that retirement
savings are guaranteed after service years.
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