Contributory Pension Scheme Retirement Benefit and the Development of Guarantee Minimum Pension for Low Income Retirees of Federal Establishments in Nigeria

Abstract

Contributory pension scheme was introduced in the year 2004. For about two decades now, PenCom has not yet finalised the financial implication and other modalities for the successful implementation of the minimum pension as stated in Section 71(1) of the Pension Reformed Act 2004. This study examined the retirement benefit under the contributory pension scheme and developed the guarantee minimum pension for federal establishment retirees in Nigeria. The study used ex-post facto research design. The study population comprises all retirees of federal establishments under CONPSS salary structure. The secondary data of all pension contributions, retirement benefits and various salary structures were retrieved from series of publications of PenCom and NSIWC. EasyFit 5.6 Professional Software together with the Least Square Model, accumulation and annuity formulae was employed to analyse the data. EasyFit Software generated statistics using the Kolmogorov Smirnov, Anderson Darling and Chi-Square Models and ranked each model statistics generated to determine the best fit for both the data and the probability distributions used. Arising from the data collected and analysed, the level of comfort of some low income retirees who spent 20 to 35 years in active service is nothing to write home about due to insufficient pension benefit. The study developed guarantee minimum pension and recommends its implementation with requisite modalities of 20 years as the minimum qualifying length of service and only 15-year post retirement subsidy.