Transparency and Accountability as Security Mechanism in the Management of the New Contributory Pension Scheme in Nigeria

Abstract

The Pension Reform Act 2004 introduced contributory pension scheme with inbuilt security measures to guard against the vices associated with the old pension scheme. The guidelines and regulatory policy instruments issued to licensed independent pension operators by the supervisory agency is to ensure that the interests of the contributors are protected. This will guarantee payment of pension rights to retirees as and when due. This article highlights insecurity of funds, lack of  regulatory and supervisory agency, weak administration, corruption, mismanagement of pension fund, insufficient budgetary  allocations and untimely release of inadequate fund for payment of pension obligations, which culminated in huge unsettled pension bills as main characteristics of the old unfunded defined pension scheme in Nigeria.  The study revealed that retirees under the old pension scheme suffered humiliation, denial of pension rights and starvation due to insincerity of purpose on the part of government agencies. The  objective of this article, therefore, is to investigate whether transparency and accountability are being maintained in the management of the consolidated pension fund in the new scheme. The study revealed that there is an agreement among respondents that the pension fund administrators and custodians exhibit transparency and accountability in the management of the pension fund. It however recommended that the licensed operators should ensure that all pension funds are insured in case of economic crash. The transparency and accountability should be extended to declaration of investment returns and the sharing formula, through a forum like annual general meeting, to carry all the  clients and other stakeholders along in managing their assets.

Key Words: Pension Scheme, Management, Transparency, Accountability, Financial Security.