This work examined the consequence of corporate administration patterns on the public presentation of pension strategy in Nigeria. The aim of this survey is to find the consequence of corporate administration patterns on the public presentation of pension strategy in Nigeria. Theoretical and Empirical surveies of this work relied on the relationship between corporate administration patterns and public presentation of pension strategy in Nigeria. It is besides of import to observe that the new pension reforms and policy pushs could hold impacted more positively on the system if the issue of systemic crisis had reduced well. We concluded that there is important positive consequence of corporate administration best patterns on the public presentation of pension strategy in Nigeria. And we recommend that all stakeholders and employees should be actively involved in the behavior of good corporate administration patterns as this is the lone manner successes could be achieved in its consequence on the public presentation of pension strategy in Nigeria.
Keywords: Pension Scheme, Corporate Governance, Pencom, PFA, RSA, PAYG
Corporate administration is the administrative agreement whereby a state or organisation is segmented or broken into administrative units with a chiseled functions stated in the fundamental law as the Torahs of the state or legislative act of the organisation. The Nigeria state started as a unit through the outgrowth of the missionaries and the British bargainers and its corporate agreement started with the creative activity of southern associated state which metamorphosed into a state with the merger of the two associated states in 1914 by Lord Lugard the governor general appointed Britain ( Esther, 2009 ) .
The corporate agreement led to the debut of Regional Government whereby Nigeria was divided into three parts viz. ; the West with central offices at Ibadan, the East with the central offices at Enugu and the North with central offices at Kaduna. The parts increased to four with the creative activity of Midwest part in in 1963 with the central offices at Benin ( Federal Republic of Nigeria fundamental law of 1990 ) .
The federated unit of Nigeria was changed from Region to province in 1967 when Gowon Administration divided Nigeria into 12 administrative units called States. It so turn to 19 province construction and eventually 36 provinces, and the Federal Capital Territory Abuja at present. Corporate administration besides refers to issues such as transparence, declaration of struggles and the overall manner in which the concern in inquiry is run. Governance besides includes answerability and anti-corruption steps put in topographic point by assorted operators or constituents ( Musalem and Palacious, 2004 ) . There can non be administration in pension fund disposal when pension subscribers ‘ financess are used to run into aims other than retirement income aim. Corporate administration would be absent if workers ‘ pension parts are used as confined beginning of finance or lost due to corruptness and misdirection.
Many pension strategies had existed before the Pension Reform Act of 2004 in Nigeria. Ahmad ( 2006 ) opines that the first public sector strategy was the Pension Ordinance of 1951 with retroactive consequence from January 1, 1946. This jurisprudence provided public retainers with both pension and tip. In 1961, the Nigeria Provident Fund was established by the Nigeria Provident Fund Act of the same twelvemonth. This was replaced by the Nigeria Social Insurance Trust Fund ( NSITF ) that was created by the NSITF Act, 1993 ( Akeni, 2006 ) .
The new pension strategy is a conducive strategy, publically and in private managed. The publically is managed by National Pension Commission ( Pencom ) while in private is managed by Pension Fund Custodians. Every eligible Employee maintains a Retirement Savings Account in his name with the Pension Fund Administrator ( PFA ) of his pick. The employees ever advise his employer of the PFA chosen and the individuality of the Retirement Savings Account ( RSA ) opened. The employee and employer contribute a minimal statutory per centum of the employee ‘s monthly emoluments ( consisting basic wage, lodging allowance and transport allowance ) into the Retirement Savings Account of the employee. The parts would be managed and administered by Professional Fund Administrators and held in detention by accredited Pension Fund Custodians. At retirement, the sum in the employee ‘s Retirement Savings Account would be the entire parts plus income and capital addition earned on the parts made ( Pension Act 2004 ) .
However, the populace sector pensions were the defined benefit or a Pay As You Go ( PAYG ) system. They depended to the full on authorities budgetary commissariats for support ( Tuner, 2006 ) . But these old strategies did non supply the needful relief for our retires. This was buttressed by Young ( 2007 ) , when he stated that the old strategies were characterised by deceitful recreation of retirement pensions and straight-out non-payment.
The job that lead old pension strategy to failure which was associated with the public pensions strategies include designation of pensionaries, finding of sum of entitlements, rapprochement of authorities overall pension liability for budgetary and be aftering intent. While noticing on the public pension debt load, Balogun ( 2006 ) stated that the public pension could non be sustained as outstanding pension shortages amounted to over N2 trillion before 2004.
Since the debut of pension strategies in Nigeria, the old pension strategies was characterized by non-payment of pensionaries, peculation of the fund by pension officers and the immense sum of pension to be paid which constitute load on authorities annually budget which result the failure of old pension strategies.
Sequel to the failure of old pension strategies, a new contributory pension strategy was introduced by the Pension Reform Act ( PRA ) , 2004. It is aimed at developing a system that is sustainable and had the capacity to accomplish the ultimate ends of supplying a stable, predictable and equal beginning of retirement income for each worker in the state. It is designed to be to the full funded ( by both the employee and employer ) , publically and in private managed and based on single histories ( Akeni, 2008 ) . A to the full funded pension fund is the 1 that has sufficient financess available to run into all future payment duties ( Cornetts, 2009 ) .
This survey is hence, faced with the job of look intoing how the best patterns in corporate administration affect the effectual public presentation of conducive pension strategies in Nigeria so that it can non fall like old pension strategies.
Against this background, the survey analyze the consequence of corporate administration pattern on the on the public presentation of pension strategies in Nigeria. Section two provides the reappraisal of relevant literatures, subdivision three provides the conceptual model and subdivision four provides decision and recommendations.
2. REVIEW OF RELATED LITERATURE
2.1 Empirical Reappraisal
Some empirical literature shows that a batch of surveies try to mensurate the relationship between corporate administration and public presentation of movies in Nigeria. The first researches ( Heracleous, ( 2001 ) ; Yermack, ( 1996 ) ; Claessens ( 2001 ) ; Klapper and Love, ( 2002 ) ; Gomper, ( 2003 ) ; and Black, ( 2003 ) ) in this country reported inconclusive consequence as their findings are inconsistence. While the 2nd group of researches ( Bebchuk and Cohen, ( 2004 ) ; Bebchuk, Cohen, and Ferrell ( 2004 ) ; Eruteya, Jesica and Okorie ( 2008 ) ; and Ovbiagele and Ekwu ( 2010 ) ) in this country has shown that good governed houses have higher house public presentation in any state. Akeni ( 2008 ) in a survey of corporate administration and new pension strategy utilizing qualitative informations, finds that the degree of conformity is really low ; and employers make tax write-offs from their employees ; wages and do non remit it to the Pension Fund Custodians ( PFC ‘s ) . Heracleous ( 2001 ) in his survey concludes that, surveies have failed to happen any convincing connexion between the “ best patterns ” in corporate administration and organizational public presentation.
Esther ( 2009 ) used descriptive study to look into the relationship between corporate administration and secretarial disposal as it affects the growing and development in Nigeria. The survey found that the relevancy of the secretary in a corporate administration and authorities attitude towards the development of secretarial profession is a great concern. Furthermore, Barkema and Gomez-Mejia ( 2008 ) argue that houses administration construction play no important function in the survey of corporate administration and public presentation of any house.
Robert ( 2010 ) used 50 questionnaires to measure the degree of conformity of corporate administration by corporations towards accomplishing organizational ends in Nigeria. The survey found among others that the rules of collectivity were non in patterns ; that direction squad and employees are non involved in determination devising ; and that chief officers and employees are non allowed to originate programmes, undertakings and policies for the corporation. Coles ( 2011 ) argue that houses have the ability to take among different corporate administration mechanisms that consequences to the optional public presentation of the house.
Akhalumeh, Ohiokha and Egberi ( 2010 ) in a survey of corporate administration patterns in the post-consolidation banking sector in Nigeria utilizing quantitative research study, found that there is partial acceptance of the rules of good administration patterns in Nigeria. In expounding, Ojuye ( 2011 ) uses descriptive study to look into the pattern in corporate administration and entrepreneurship development concentrating on authorities policies. The survey observed that authorities policies formulated towards promoting the development of enterprisers over the old ages are positively equal and that the structural administration, lack of SMEs tends to advance uneffective corporate administration in Nigeria.
Mariassurita and Luc ( 2007 ) in a survey of pension reform, ownership construction and corporate administration in Sweden, found out that steadfast public presentation improves if big independent private pension financess and public pension financess increase their equity bets in the house, but non if smaller pension financess and pension financess related to fiscal establishments and industrial groups increase their shareholdings. Augusto ( 2009 ) studied pension reform and corporate administration in Chile, found that companies where pension financess have invested are under close public examination because of corporate administration and that capital market growing has besides had positive effect on corporate administration. Besides, Pablo, karem and Jose ( 2011 ) used ordinary least square method to find corporate administration, stock market and economic growing in Brazil. By the methodological analysis adopted there are groundss that companies who adopt better patterns of corporate administration have better public presentations ( roll up more benefits ) in the economic growing rhythm than those companies that do non follow them.
In a survey by Erureya, Jesica and Okorie ( 2008 ) , they surveyed the corporate administration in Nigeria looking at the issues impacting shareholders and directors towards accomplishing growing and development. The survey reveals that corporate administration is good in reforming the board regulating the corporation and shareholders are legal proprietors of a corporation. Ozigbo and Eloho ( 2009 ) in a survey of measuring the relationship between banking loaning and corporate administration in Nigeria found that instances of bad debt is still present in Nigerian banking industry.
In a recent survey by Ovbiagele and Ekwu ( 2010 ) , they used qualitative study to look into corporate administration patterns for national development concentrating on the challenges for direction instruction in Nigeria. It was discovered that the ideal corporation governors requires managerial accomplishments for conceptualisation of thoughts and proficient accomplishments for their efficient operations. Furthermore, Ofishe and Mukoro ( 2011 ) in a survey of good corporate administration as a tool for effectual concern direction in Nigeria utilizing chi-square equation. The survey reveals that there is a important part of corporate administration in Nigeria.
2.1.1 Discussion of Reviewed Literature
Corporate administration patterns in this instance affect all activities engaged to increase, better or keep the public presentation of pension strategy in Nigeria. The issue of pension strategy public presentation has received much attending in many states since the constitution of corporate administration. In fact, in recent times, pension strategy has progressively attracted the attending of policy shapers in many states as a agency of easing in private funded retirement income nest eggs by an ageing work force ( World Bank, 2009 ) . This means that corporate administration has helped the public presentation of pension strategy when pension subscribers ‘ financess are used to run into aims of retirement income aim. Akhalumeh, Ohiokha and Egberi ( 2010 ) opine that corporate administration means the construction of relationships for determination devising and action within a corporate entity. Audu ( 2007 ) defines corporate administration as: “ the relationship between the stakeholders and direction of an administration as defined by the corporate character, pass Torahs, formal policies and regulation of Torahs. Akeni ( 2008 ) defined pension strategy as a retirement benefit or Pay As You Go ( PAYG ) system.
2.1.2 The Gap in Literature
The extent of which corporate administration patterns affect public presentation of pension strategy has been widely studied. A good per centum of research workers revealed that corporate administration best patterns have the capacity of heightening the public presentation of houses including Nigerian pension strategy.
While a small per centum of them have nil to state in regard of the consequence of corporate administration best patterns on the public presentation of pension strategy. This means that corporate administration has important consequence on the public presentation of pension strategy in Nigeria.
2.2 Theoretical Model
Theories are sets of constructs and generalisations arranged to explicate and foretell possible and likely relationships among phenomena. They are besides preparations and rules of behavior through which knowledge about human interactions can be increased. They are found on observation and analysis. Theories, as signifiers of account additions knowledge about what are go oning in and around the corporate administration and its administration.
Many theories have been developed in relation to pension reform across the Earth. In this survey, we made usage of three of them ( public-service corporation and penchant theory, life rhythm theory, and productiveness theory of pension ) that are practically relevant to our survey are to look into the consequence of corporate administration patterns on the public presentation of pension strategy in Nigeria. We explain each of them really briefly below.
This is because of the attaching benefits. The benefits include decrease in income revenue enhancement of the employee ; the retirement benefits ; such as societal security from the employer ‘s parts, involvement net incomes and dividend net incomes on pension fund investing or assets that are non taxed. Others include the chance of future enhanced and acceptable pension benefits, from awards or additions as may be offered by the authorities from clip to clip. Yet another benefit is an insurance screen of kinds against hazards that pension provides.
The supply side of this theory posits that employees ‘ addition from pension tends to raise the degree of work force productiveness and cut down labor costs. This is because the employers ‘ investing in the preparation of the work force, improved conditions of service, proviso of equal resources, etc. are greatly off-set by the work force ‘s improved end product or productiveness. There is besides the position that the supply side to the theory serves as an inducement for forces to stay in the organisation for a long clip.
2.2.1 Discussion of Theoretical Framework
Utility and penchant theory is instead weak nor strong as a subjective determination pick since it may be justly argued that one of the virtues of the Utility and Preference theory is the fact of the admittance of qualitative instead than to a great extent quantitative content. It is besides easy appreciable, explainable, and apprehensible by decision makers.
Theory of life Cycle believed that sustainable corporate administration patterns on the public presentation of pension strategy can turn immense fiscal resources for farther investing net incomes which can do important redistribution of income, taking to increased wealth to pension participants.
In the productiveness theory of pension, it argues that the organisation tends to derive because big work forces enhance high productiveness and fond regard to the administration.
2.2.2 Theory Implication
Constitution of corporate administration best patterns in Nigeria is expected to heighten the public presentation of pension strategy in Nigeria. This is because the theory has deduction on the power of immense income creative activity and redistribution to participants or subscribers, which leads to increased wealth. Hence, the public presentation of pension strategy through the usage of corporate administration best patterns has the power to alter or impact the life rhythm of the pensionary. However, the dependability of the Pension Fund Administration, the regulative organic structures and security agents must do usage of corporate administration best patterns and every bit good to guarantee that pension strategy play its function efficaciously.
3. Conceptual Model
3.1 Conceptual Review
The word “ corporate ” denotes sharing by a group of people who are function participants in an administration. Governance, on the other manus, involves the governed and the governor. Using this account as natural stuffs for the development of this paper, the term corporate administration, harmonizing to Aseni ( 2001 ) depict corporate administration as a mode with which administrations establishments or communities are managed and the nature of answerability resources directors are expected to render to proprietors. Ayadi ( 2006 ) besides describes corporate administration as the holistic system of administration, direction and control by which companies, establishments and authorities, concerns are directed in the thrust towards the accomplishment of their set ends. Unusually, corporate administration concerns the exercising of power in corporate entities.
The Pension Reform Act, 2004 established the National Pension Commission ( PenCom ) which is the regulative authorization for pension affairs in the state. PenCom licenses Pension Fund Administrators ( PFA ‘s ) and Pension fund Custodians ( PFC ‘s ) . Employees choose their ain Pension Fund Administrators and open Retirement Savings Accounts ( RSA ‘s ) with them. The PFA ‘s issue the employee with a Personal Identity Number ( PIN ) . The employee sends his PIN figure to his employers ‘ paysheet section for tax write-off to be made from his monthly wage. The employer adds his ain part to the employee ‘s and remits it non later than seven ( 7 ) yearss after wages payment to the PFC appointed by PFA. A good corporate administration pattern helps the Pension Fund Custodians to maintain the financess while Pension Fund Administrators credits the employee ‘s Retirement Savings Account.
A 3.2 Reason for creative activity of Corporate Governance in Nigeria.
To stem the call of marginalisation by assorted folks.
To convey the authorities closer to the people.
To heighten speedy development of all subdivision in the state most particularly after the civil war.
To heighten the growing of the state in the country of industrialisation, commercialism, instruction, infrastructural development, employment, and general economic growing.
To heighten peaceable co-existence among assorted folks and warrant the involvement of minority group in the federation. Corporate administration enhances interdependent among the constituents units for the intent of development.
However, it should be noted that even till day of the month, the agitation for creative activity of more corporate units of disposal in Nigeria is still unabated.
4. Decision and Recommendations
We can state that corporate administration best patterns have the potencies of lending to the public presentation of pension strategy in Nigeria. The old strategies did non supply the needful relief. The new pension strategy can be seen as the Panacea for the assorted jobs created by the old strategy. But the job that workers are confronting now is deficiency of committedness by the employers.
Since good corporate administration is expected to lend positively to the public presentation of pension strategy. We hence, conclude that the National Pension Commission ( PenCom ) , Pension Workers Unions and the non-governmental administrations ( NGO ‘s ) should set every attempt to guarantee that there are good corporate administration patterns in the execution of pension strategy Act so that it can lend meaningfully to the growing of Nigerian economic system. We besides conclude that there is important consequence of corporate administration best patterns on the public presentation of pension strategy in Nigeria.
Based on the nature of this work, we proffer the undermentioned recommendations:
1. All stakeholders and employees should be actively involved in the behavior of good corporate administration patterns as this is the lone manner successes could be achieved in its consequence on the public presentation of pension strategy in Nigeria.
2. The pension strategy should follow minimal criterions in unwraping corporate administration patterns. Such revelations will supply other stakeholders crystalline images of the degree of corporate administration patterns in the new pension strategy.
3. Pensioners should be encouraged through the usage of good corporate administration best patterns by paying them their pension fund after retirement.
4. Corporate administration practicians should adhere and follow with the demand of pension strategy to guarantee that they meet the aims of the pensionaries.