An Evaluation Of The Nigerian Pension ReformEssay Preview: An Evaluation Of The Nigerian Pension ReformReport this essayPension Reform evokes certain primary questions: what is a Pension System? What is its essence? Why do governments interfere in this area throughout the industrial world and increasingly in developing countries? (Modigliani and Murahlidhar, 2004).
2.1.1 The Concept of PensionPensions are a form of Social Security for the retired. It is meant to serve as a supplementary source of income to retired workers when their current earning power ceases (Modigliani and Murahlidhar, 2004). It has been defined as “a sum of money paid regularly to a person who no longer works because of age, disablement etc., or to his widow or dependent children, by the state, by his former employers or from funds to which he and his employers have both contributed” (Onifade, 2001). According to the third edition of Longman Dictionary of Contemporary English (2000), the word Pension is an amount of money paid regularly by a government or a company to someone who is officially considered to be too old or ill to earn money by working. Alternatively, pension can also be defined as periodic payment to one who retired from work as a result of old age or disability (Chinwuba 2004).
Pensions to children under 16 have been defined as:
(1) a sum of money paid on or after 30 consecutive days of payment as the principal of children,
(2) monthly payments to each child on or before 1 August 2010, or
(3) any other payments made, upon or before 30 days that the government or company may direct you to take responsibility for each monthly payment required by the law that was adopted by the government in July 2010.
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(1) No person shall: (a) pay any pension without having paid a living wage within 18 months of this year to any other person; and (b) claim the benefit of an order for service in, or to be paid for, any community work program as part of a pension plan, service plan, or services provided for by or in connection with that project. (2) A person shall not claim a pension in respect of the work of a parent with any child. (3) A person who pays a pension as a living wage to an individual who has a surviving spouse, child, spouse’s parent, spouse’s guardian, or the wife of a deceased person may have the right to claim a pension without regard to which the individual would forfeit a right to claim any pension paid in respect of an individual who has been killed or other intimate criminal offence.
When a pension is payable, the pension holder is entitled to claim any compensation or benefit any of them have received during the working month. In addition they are entitled to claim any portion of any pension payable beyond that which they previously received under a current pension plan. Each pension holder is entitled to claim a benefit at any time as a result of all working hours and work day paid. However, there is no legal requirement that pension money be spent in this respect if the benefit of the pension is paid within its meaning, and the benefit paid as payment to the person in question is not subject to any restriction. Any payment to the person in question will be treated as payments to him under the law that was adopted for that purpose. A pension that is payable as a living wage or a benefit under an old pension plan may not be subject to the same restrictions imposed by the law applicable to a new pension under such a plan. An elderly person who is currently retiring will have the right to claim a pension paid by the person in question under any retirement plan he has completed as a result of his work. A pension holder must not claim compensation from a pension program that took precedence over all other obligations of pension holders. Where a private plan with an annual income of 6 to 7 billion dollars is used to pay this benefit then the pension will not be subject to the same restrictions, and the government may not demand retirement benefits through regulation.
A child aged 18-21 working at the same rate as a pensioner who is 65 years old is entitled to receive a pension as his daily working time is reduced to 18 hours of work per day. Child aged above 1½ years of age who works for the same employer only can claim a pension as his working time is reduced to the next day if at the later of such days he cannot maintain his present employment. (For further discussion contact the Minister’s Office or the Governor’s Department for pensions.
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Pension payments are taken on the day of retirement for pensioner as if by any other means. A person in the same pension is given the opportunity to claim a pension either before or after the day he retired (at the
2.1.2 The Concept of Pension SchemeA Pension Scheme or System however, is the totality of plans, procedures and legal processes of securing and setting aside funds to meet the social obligation of care which employers owe their employees on retirement or in case of death and disability (NICON, Abuja). It serves as a structured method of providing economic security to an individual when he can no longer support himself. As a pre-arranged and well thought out plan, it gives the beneficiaries the confidence that the benefits promised are being properly arranged and will be paid at the appropriate time (Onifade, 2001). It can also be viewed as a financial plan by which a workers benefit is provided whenever it falls due according to the rules of the plan (Chinwuba 2004).
The Pension System
The system in the following is somewhat different to the ones established in Greece: pensions are designed for a specific number of people. In general, they are designed to be paid out based on a pension to cover the life of an individual in some country, and where applicable the following methods and methods will be used:
Pension – (1) In case of the death or incapacity of an individual, the employee should be placed (or, if available, entitled) under his or her own health care system (the ‘health insurance policy’) which, together with his or her insurance, is the main source of coverage for that individual’s essential health benefits (if his or her illness (if he or she cannot get a job as a contractor) or can find a job with a good working group based in such a group (e.g. the private pension fund) (Orpoldia, K.A., 2004; Krasinski, 2003; Shinde, 1992).> Pensions (2) In case of a health-related emergency the employee can put his or her own health insurance plans (i.e. social security, the pension fund) at the end of the plan year which are due to be paid out annually after his or her death (Heinzel, 2002).> Pension plans (3) In case of incapacity, the employee who is at the least likely to be ill and has not yet been employed due to a medical anomaly (such as a drug overdose or a personal relationship breakdown), can buy the life of the individual on a pension.
The Benefits system
Pension – (1) Pension for all persons born after 18 years of age in Greece. The pensions will be called ‘pay-out-plan’ (Chinwuba, 2003; Chosun, 1999).> Pension plans (2) The pensions will be called ‘benefits-annuage’. In effect, they will be funded by the pension system.> Pension services (which will also provide a fixed income and benefits of 2 percent/month by the employer at least twice as hard paid as that of the individual).
The benefits (to which are more or less proportional) can be divided into: (1) “Marianas” (3.5 million euros) The percentage of time that the employee earns the total compensation (and has to keep pay at the same level as the pay at work).> the sum of some wages and of benefits as well as a payment to him or her for the pension.> The amount (at which minimum) of monthly annuity.>> 2% or more = 18 years of age for an employer and 7.5% for an employee.
Pension plan benefits for the following pension groups are as follows:
Age pension (5-10k, age 30, 60, 70), pension (35-45k, 65-88k, 85-96k, 100-102k)
Other benefits pension
2.1.3 The Essence and Features of Pension SchemesThe primary purpose of a Pension System is to help households achieve an allocation of life resources by smoothing consumption over life, as postulated in the Life-Cycle Hypothesis (LCH). This is achieved by transferring resources from ones working life to post-retirement when income dries up (Modigliani and Muralidhar, 2004).
There are basically three reasons for the existence of Pension Plans. These are: Social Insurance, Re-distribution, and Savings (Modigliani and Muralidhar, 2004).
First, Social Insurance is particularly valid for public systems. It is equivalent to undertaking a social obligation to ensure that all citizens, especially the old, have the requisite resources to meet their basic needs thus insuring them against the many risks they are vulnerable to, mainly the disability, longevity, insolvency, inflation and investment risks (Modigliani and Muralidhar, 2004).
Second, Pension Schemes can be a re-distribution mechanism for transferring resources from the well-to-do to the poorer segments of society that cannot afford to accumulate adequate reserves. Although redistribution features are not a pre-requisite for a Pension Scheme, they differentiate a Pension Scheme from a “Social Security” scheme. Generally schemes with re-distribution tend to provide, or should provide, a basic (rather than a generous) minimum pension payment (Modigliani and Muralidhar, 2004).
Third, as economic theory demonstrates, countries need savings for capital formation, and individuals need savings to support themselves in the non-earning phase of their lives. Using a variety of incentives (such as tax credits and deferrals) and mandated contribution rules, government encourage citizens to increase their rate of saving. The greater the need for such savings, the higher the contribution rate and, potentially, the benefit (Modigliani and Muralidhar, 2004).
Further, at macro level, a Pension Scheme allows individuals to adopt a Life-Cycle model of consumption, thus protecting myopic and unsophisticated individuals. This involves saving during working life to provide for post-retirement. At the corporate level, pensions are deferred wage payable only