CORRUPT PRACTICES IN NIGERIA’S RETIREMENT AND PENSION SCHEME
BY
REGINA U. OBI, Ph.D
ASSOCIATE PROFESSOR
DEPARTMENT OF SOCIOLOGY AND ANTHROPOLOGY,
UNIVERSITY OF BENIN, BENIN CITY, NIGERIA
E-MAIL: [email protected]
Mobile Phone: 08021124250
Abstract
Corruption is a dishonest and wicked behaviour practiced by different
institutions, worldwide. It is not peculiar to Nigeria alone. The main objective of this
paper is to identify corruptible practices which exist in Nigeria’s retirement and
pension scheme, and proffer suggestions for eradication. Purposive sampling
technique was used to select 500 respondents from five selected States in Nigeria.
Data collection techniques used, were structured questionnaires, official documents
and records. Descriptive statistics were used for data analysis. The study
discovered, inter alia, the corrupt practices which exist in retirement and pension
scheme. Concrete suggestions were made for eradication.
Introduction
This paper focuses on the issue of corruption in retirement and pension
scheme Nigeria since 1979 to date in. Five hundred respondents were used for the
study. Durkheim strain theory of anomie provided the theoretical framework. The
Nigerian Retirement Policy is governed by Pension Decree 1979, No. 102. The
policy stipulates the statutory provision of the entitlement of employees in public
services who have served the nation meritoriously in various capacities. The key
issues in Retirement Policy are pension and gratuity. These are benefits to the
pensioners. Pension is life annuity, i.e. payment made by the State to someone old,
disabled, or widowed or by a former employer to an employee after long service.
Whereas, gratuity is lump sum of money given by an organization or government to
employee who has retired from active service (Hornby 1995:382-630).
Corruption is defined in this paper, as those attitudes, practices, and
behaviours which are contrary to the established social norms, values, laws, rules
and regulations in institutions, bureaucratic and non-bureaucratic organizations,
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public and private corporations. It pervades all systems, and sub-systems in
societies, small and large, open and closed, developed and undeveloped,
industrialized and un-industrialized. It has eaten deep into the fabrics of societies
everywhere including Nigeria. Transparency International Index (2001) rated Nigeria
as the 2nd most corrupt nation in the world. The objective of this paper is to
determine corruptible practices which pensioners encounter in collecting their
gratuities and pensions in Nigeria, and proffer suggestions for eradication.
Research Problematique
Nations, worldwide, provide retirement benefits (i.e. gratuities and pensions
for their retirees. Nigeria operated defined benefits scheme between January 1946
and June 2004. Within this period, there were numerous corruptible practices in
payment of gratuities and pensions such as falsification of age, delays in payment,
long distant travels to receive payments, ghost workers, embezzlement of funds,
mismanagement and diversion of funds (The Post Express June, 2000). These
exploitation evils were purely administrative. The pensioners had to cry out aloud in
streets and mass-media for a positive change (Obi, 2002: 91-100). Thereafter, the
Pension Reform Act 2004 was enacted on 25th June, 2004 and became effective on
1st July, 2004 to redress corruptible practices in the scheme. The Pension Reform
Act 2004 established a defined contributory scheme as against the defined benefit
scheme it succeeded (Wikipedia, 2010).
The objectives of the Pension Reform Act 2004 are:(i)
To ensure that everyone who has worked meritoriously, receives
retirement benefit as and when due to reduce old age poverty. This
applies to employees in the public service of the Federation, Federal
Capital Territory, and the private sector. Retirement benefits have
changed over the years. Currently, the retirement age of employees in
the judiciary is 70 years, the University professors 65 years, and 60
years in other public service and private sector with 35 years in service
whichever is earlier, and 15 years in service for voluntary retirement.
Forceful retirement whereby an officer is forcefully retired without
preparing for it still exists. Table 1 below shows the formula for Pension
and Gratuity calculations based on percentage of Final Salary in
Respect of Retirement since 1992. This formular is currently in use,
even today.
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(ii)
To assist improvident individuals by ensuring that they save in order to
cater for their livelihood during old age; and
(iii)
To establish a uniform set of rules, regulations, and standards for the
administration and payment of retirement benefits.
The Reform Act 2004 has certain functional mechanisms which include:
(i)
Mandatory contribution in the case of the public service of the
Federation, and Federal Capital Territory: A minimum of 7½% by the
employer, and a minimum of 7½% by the employee’s salary, housing,
and transport allowances into individual’s Retirement Savings Account
(RSA);
Mandatory Contribution in the case of the military: A minimum of 12½
% by the employer and a minimum of 2½ % by the employees’ salary,
housing, and transport allowances into individual’s Retirement Savings
Account (RSA);
Mandatory contribution in other cases: A minimum of 7½% by the
employer and a minimum of 7½% by the employees’ salary, housing
and transport allowances into individual Retirement Savings Account
(RSA);
(ii)
Mandatory contribution is remitted monthly into designated Pension
Asset Custodian (PAC);
(iii)
Pension Asset Custodian notifies the Pension Fund Administrator
(PFA) appointed by the employee within 24 hours of remittance of
contribution;
(iv)
Pension Fund Administrator (PFA) issues a PIN (Personal Identity
Number) to the employee, manages the contribution, and credits the
returns into the individual Retirement Savings Account (RSA);
(v)
The PAC, PFA, and employer’s activities are regulated and supervised
by National Pension Commission (PENCOM).
I personally perceive the above functional mechanisms as checks and balances for
effective management and control of corruptible practices in Retirement benefits, if
strictly adhered to. Never-the-less, the reverse seems the case in Nigeria today.
Based on these observations, this paper has these questions, among others, to
answer:- Have you had any reason(s) to distrust your pension administrator? Where
do you go for pension up-date(s)? why? Narrate your experiences in the exercise(s).
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Table 1: Formula for Pension and Gratuity Calculation Based on Percentage of
Final Salary in Respect of Retirement Since 1992
BEFORE 1992
Years
of Gratuity
Qualifying as
service
SINCE 1992 TO DATE
%
Pension as % Years
of of final pay
final pay
of Gratuity as Pension as
qualifying
% of final % of final
service
total
total
emolument emolument
5
100
-
6
108
-
7
116
-
8
124
-
9
132
-
10
100
-
10
100
30
11
110
-
11
108
32
12
120
-
12
116
34
13
130
-
13
124
36
14
140
-
14
132
38
15
100
30
15
140
40
16
110
32
16
148
42
17
120
34
17
156
44
18
130
36
18
164
46
19
140
38
19
172
48
20
150
40
20
180
50
21
160
42
21
188
52
22
170
44
22
196
54
23
180
46
23
204
56
24
190
48
24
212
58
25
200
50
25
220
60
26
210
52
26
228
62
27
220
54
27
236
64
28
230
56
28
244
66
29
240
58
29
252
68
4
30
250
60
30
260
70
31
260
62
31
268
72
32
270
64
32
276
74
33
280
66
33
284
76
34
290
68
34
292
78
35
300
70
35
300
80
Source: Pension Reform Act 2004, Abuja, Federal Republic of Nigeria.
Objectives of the Study
This is an attempt to determine the corruptible practices which exist in
gratuities and pensions in Nigeria since 1979, and up-to-date, five hundred
respondents were used for the study. Durkheim’s strain theory of anomie provided
the theoretical framework.
Scope of the Study
This research covered only pensioners in five states in Nigeria, namely:
Federal Capital Territory, Lagos State, River State, Delta State, and Enugu State.
The pensioners comprising males and females from the age of 35 years old and
above were studied. The research was particularly interested in workers who retired
from public services including educational institutions, hospitals, military, airforce,
navy and private industrial organizations of the Federation of Nigeria.
Brief Overview of theoretical framework
Durkheim’s strain theory is found useful to explain corruptible practices in the
Pension and Gratuity Scheme. Norms are specific behavioural standards in
societies. They are ever-changing, shifting as society shifts; mutable, emergent,
reflective of inherent biases and interests; vary from class to class, and in the
generation gap. Contrary to norms is deviance. Sociologists such as Thomson
(2004:2) characterized deviance as “violation of the norms of a society or groups”.
Whereas Jensen (2007:11) characterized deviance as conduct that violates the
definitions of appropriate and inappropriate conduct shared by the members of a
social system. From the above characterizations, we can deduce that deviants are
criminals who challenge and oppose normal behaviours in groups and societies,
and, thus, engage themselves in corruptible practices, such people are unregulated,
and fall under “anomie”, lawlessness, and crime.
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Emile Durkheim saw crime as “a factor in public health, an integral part of all
healthy society (Durkheim, 1938:68-81). His strain theory of anomie attributes social
deviance to extremes of the dimensions of social bond categorized under three
forms of suicide. Altruistic suicide (i.e. death for the good of the group); egoistic
suicide (i.e. death for the removal of the self due to or justified by the lack of ties to
others); and anomic suicide (i.e. death due to the confounding of self-interest and
societal norms). Likewise, Durkheim continued that individuals may commit crimes
for the good of an individual group, for the self due to or justified by lack of ties, or
because the societal norms that place the individual in check no longer have power
due to society’s corruption.
In this paper, Durkheim strain theory of anomie is
applicable to an officer in Gratuity and Pension Office who become corruptible for the
good of his group, for the self due to or justified by lack of ties, or because the
societal norms that place him in check no longer have power due to societal
corruption.
Research Methodology
The Target Population
The research was particularly targeted at men and women pensioners aged
35 years and above residing in selected States in Nigeria, namely: Lagos State,
Federal Capital Territory, Delta State, River State, and Enugu State.
Research Sample Size and Procedure
Abortive efforts were made to retrieve the population of pensioners in Nigeria
from the data bank. So, the researcher resorted to tracing the pensioners out
through generous “leads’ in the selected States for the study. Purposive sampling
technique was used to select five hundred pensioners who co-operated fully with us
by answering all the questions asked. Distribution of the sample size was as follows:Lagos State 121 pensioners; Federal Capital Territory 100 pensioners, River State
83 pensioners, Delta State 109 pensioners; and Enugu State 87 pensioners.
Thus, the total sample size was 500 pensioners; 346 men, and 154 women.
Data Collection
Structured questionnaires constructed by the researcher were used to collect
data. Each questionnaire had two sections, and contained only 15 questions. Section
one, dealt with the personal details of the respondents. It contained questions on
issues such as gender, age, previous work experience and status. Section two
contained questions of which answers were used to achieve the research objectives.
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Nominal and ordinal scales were used to measure the data. The questionnaires
contained open-ended and multiple choice questions. These helped the respondents
to “open up” and “speak out”. Before administering the questionnaires to the
respondents, the questionnaires were pre-tested with 20 (twenty) pensioners in
Benin City in order to test the validity and reliability of the instrument. Thereafter, the
researcher and four research assistants personally administered the questionnaires
to 500 respondents located in Lagos State, Federal Capital Territory, River State,
Delta State and Enugu State. There was 100% response rate.
Official Documents and Records
This supplementary instrument was used to collect official documents such as
historical development of Gratuity and Pension Scheme in Nigeria. The documents
were retrieved from the internet services, and used to give background information
about the pension and gratuity scheme.
Method of Data Analysis
Descriptive Statistics were used for data collected from official documents and
records. For data collected from structured questionnaires the researcher used
cross-tabulation to show relationships between variables.
Socio-Economic Characteristics of the Pensioners (Respondents)
Age of the Respondent
Data on Table 2 below shows that out of 500 respondents (346 males and
154 females) 183(36.6%) belonged to the 35 – 59 years age cohort; 317 (63.4%)
belonged to the 60 years and above age cohort. This result meant that majority of
the pensioners were 60 years and above.
States of the Respondents (Place of Residence)
Out of 500 respondents 121 (24.2%) resided in Lagos State; 100 (20.0%)
resided in the Federal Capital Territory; 83(16.6%) resided in River State; 109
(21.8%) resided in Delta State; and 87 (17.4%) resided in Enugu State. Majority of
the respondents lived in Lagos State, Nigeria. (see Table 2, below).
Level of Education
Out of the 500 respondents, 128(25.6%) were graduates with various
categories of degrees such as Doctor of Philosophy, Masters of Science; Bachelor of
Arts in different disciplines and from different universities inside and outside Nigeria;
the rest, 372(74.4%) were non-graduates. Out of these 372 non-graduates, 275
attained professional diploma certificates, Teachers’ Grade Two Certificates,
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General Certificate of Education and equivalents; only 97 attained First School
Leaving Certificates form primary schools. This statistical analysis meant that
majority of the pensioners were non-graduates and attained lower levels of formal
education (see Table 2, below).
Previous Employment
All the respondents were public servants. Out of the 500 respondents, 119
(23.8%) worked in the military; 320 (64.0%) worked in different ministries at Federal,
State and Local Government of the Federation of Nigeria, and only 61(12.2%)
worked in the Judiciary (see also Table 2, below). The pensioners included
professors, medical doctors, lawyers, registrars, accountants, police and security
officers, technicians, welders, drivers, clerks and cooks. Two hundred and three
Respondents (40.6%) were in active service for upto 25 years; only 297 (59.4%)
worked for 26 years and above. As regards the year of retirement, 177(35.4%)
retired upto year 2000; 148 (29.6%) retired between 2001 and 2005; and 175
(35.0%) retired between 2006 and 2010. This analysis meant that most of the
respondents retired from active public service before 2001.
Present Employment after Retirement
Data analysis shows that out of 500 respondents, 39(7.8%) are doing nothing,
simply relaxing at home; 46(9.2%) join politic; 93(18.6%) are currently in security
services; 18(3.6%) are students; 41(8.2%) drivers; and 263(52.6%) are selfemployed. These self-employed pensioners are in various types of small-scale
businesses e.g. imports and exports, contract, legal practice and farming. This
statistical analysis meant that majority of the pensioners are self-employed (see
table 2, below). They prefer to have their own small-scale businesses and enjoy the
benefits of being their own masters rather than spending their lifetime being bossed
about as servants of others. The study further revealed that 444(88.4%) had
received their gratuities and pensions up-to-date, though at irregular periods. Only
56(11.2%) had not received. Those who had not received, claimed that their papers
are still being processed for over one year. However, those who had received their
gratuities and pensions did go for pension up-dates, quarterly, bi-annually, and
annually. The dates for going for pension up-dates are not fixed and irregular.
Whenever the governments decide to hold screening exercises, pensioners are
invited to attend. The screening exercise is for verification of signatures etc to
determine the real pensioners in the Pension Registers. This exercise could be
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fruitful and yield high dividends if done judiciously. But, the reverse often seems the
case from Nigerian experience.
Table 2: Socio-Economic Characteristics of the Respondents (Pensioners)
Category of Responses
Frequencies
Percentages
Age of the Respondents
35 – 59 years
183
36.6%
60 and above
317
63.4%
500
100.0%
Total
States of the Respondents/Place of Residence
In Lagos State
121
(24.2%)
In Federal Capital Territory
100
(20.0%)
In River State
83
(16.6%)
In Delta State
109
(21.8%)
In Enugu State
87
(17.4%)
500
(100.0%)
Total
Level of Education
Graduates
128
(25.6%)
Non-Graduates
372
(74.4%)
9
Total
500
(100.0%)
Previous Employment
Military
119
(23.8%)
Judiciary
61
(12.2%)
Other Ministries at Federal, State and
Local Governments of Nigeria
320
(64.0%)
500
(100.0%)
Total
Present Employment after Retirement
Nothing/Simply Relaxing
39
(7.8%)
Join politics
46
(9.2%)
In Security Services
93
(18.6%)
Students/studying
18
(3.6%)
Drivers/driving
41
(8.2%)
Self-Employment
263
(52.6%)
500
(100.0%)
Total
Corrupt Practices in Retirement and Pension Scheme
The study has revealed the following corrupt practices (see Graph1 below)
which exist in Retirement and Pension Scheme in Nigeria up-to-date:(i)
Delays in Payment of meagre gratuities and pensions
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The pensioners 178(35.6%) claimed that gratuities and pensions were small,
and insufficient to purchase basic needs and maintain good standard of living. They
were not even paid on time; there were always delays in computations. Most often
relevant papers for computations were declared missing and misplaced in the
pension offices. In some cases, the entire files were not found, and so declared
missing or misplaced. The movement of the files even in the pension offices could
not be traced. In the circumstances, it could take up to one year to retrieve the
missing files and act upon them. These delays cause much problems, stresses and
strains especially for the victims i.e. pensions who engage in several repeated
journeys without fruitful results. Their meagre savings, efforts, time, and other
sacrifices were being wasted for nothing. In addition, their cumulative arrears were
not paid to them. The usual response was that there was no money to pay. This type
of
administrative
practice
is
cheating,
exploitative,
tantalizing,
humiliating,
intimidatory and corruptible.
(ii)
Bribery/Financial Demand for Service
One hundred and twenty five pensioners (25.%) complained that for them to
be served/attended to, retrieve their “so called” missing files, papers and related
documents in pension offices, they had to pay some illegal monies/bribes.
Pensioners were intimidated and forced to give bribes. They gave bribes to the
pension officers to receive services which they are paid to render to the public.
These are illegal, deviant, criminal, and corruptible behaviours and practices which
are contrary to the defined norms in pension offices.
(iii)
Risky and Distant Travels
Eighty-nine pensioners (17.8%) stated that they had to travel/trek distant
places to pension offices to collect the pensions, to up-date their records, and sign
the Pension Registers. The journeys are risky considering the harsh chargeable
weather; intensive sun, and heat, torrential rain with heavy floods, bad road with
deep pot-holes in places. Some even collapsed on the way due to hunger and
distant travels. The pensioners are old; weak and fragile and should not be stressed
to death.
(iv)
Over crowded and noisy venues
One hundred and eight pensioners (21.6%) stated that they are usually
gathered and attended to, in the open space under the hot sun or rain to collect
pensions or sign the Pension Registers during screening exercises. Each screening
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exercise could last for three or more days because of over-crowding. The venue is
usually jam-packed and unhealthy. The pensioners who are unwell and could not
cope with the situation often collapsed in the scene. The unhealthy condition of the
venue and related negative effects are equally corruptible, and against human rights.
The above corrupt practices are used to explain Durkheim strain theory of
anomie which this research discovered in the administration of Gratuity and Pension
Scheme. His theory holds the views that the societal norms which place him (i.e.
pension officer) in check no longer have power due to corruption. This paper
supports the views of Durkheim.
Summary and Conclusions
This is an empirical research interested in discovering the existing corrupt
practices in Nigeria’s gratuities and pension scheme. The corrupt practices were
discovered. They were transparent in the administrative services. Pensioners were
the victims of the corrupt practices. In view of the research findings, the following
recommendations are made for eradication of the corruption, and policy
implementation:(i)
Government should up-grade and increase pensions whenever wages
and salaries of workers are increased. This would enable pensioners to
have higher pensions, purchase their basic needs, and enjoy improved
lifestyles at all times;
(ii)
Government should bring pension offices closer to the people in local
government areas with adequate facilities in place, such as canopies to
shield the pensioners from heat of the sun and rain since they receive
services in open spaces;
(iii)
Prompt and regular payment of gratuities and pensions are inevitable
for their survival, to justify the key objective of the Pension Reform Act
2004, and to enable pensioners plan and manage their retirement
benefits judiciously; and
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Figure 1: Corrupt Practices in Nigeria’s Retirement and Pension Scheme
Bribery/Financial
Demands
125(25%)
Risky and Distant
Travels
89 (17.8%)
Over crowded and
Noisy Venue
108(21.6%)
Delays in Payment
178(35.6%)
Source: Field work, January – September, 2010
(iv)
Adequate monitorization and supervision of pension officers on their
duty-posts are crucial. This would help to control all manner of delaying
tactics used to facilitate bribery and corruption, and to apply all
necessary “sticks” and sanctions to stop it e.g. immediate termination
of appointment/employment of any officers found corruptible.
References
Durkheim, E. (1938) The Rules of Sociological Method Chicago: The University
of Chicago Press.
Durkheim, E. (1893) The Division of Labour in Society Trans. L.A. Coser. New
York: The Free Press.
Hornby, A. S. (1995) Oxford Learners Dictionary of Current English. Oxford,
Oxford University Press
http://en.wikipedia.org/wiki/deviance_sociology
Jensen, G. F. (2007) The Path of the Devil: Early Modern Witch Hunts. Rowman
and Littlefield.
Obi, R. U. (2002) An Appraisal of Retirement Policy in Nigeria, Benin Journal of
Social Sciences Vol. 10 & 11, Nos 1 & 2, June, 91 – 100.
The Federal Military Government of Nigeria (1979) Pension Decree 1979, No.
102, A 779 – A799.
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The Federal Republic of Nigeria (2004) Pension Reform Act 2004, No. 2.
The Post Express (2000) “Nigerian Pensioners’ Pangs” The Post Express,
Friday, June 9.
Thomson, D. (2004) Crime and Deviance
Transparency International Index 2001.
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