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ABSTRACT
The problems associated with the 1979 Pension Act necessitated its abolishment and on 25th June 2004 and a new pension reform Act was enacted. The unique feature of this new Act is that it provides for contribution for the employees and the employers, each making 7.5% contribution to the scheme, except for the military.

Voluntary saving was also introduced where self employed workers can make their contribution. A commission was set to register pension administrators and fund custodians and to ensure their supervision. The purpose of this research is to evaluate the effects of the reform Act on the public. In this evaluation, the researcher uses both primary and secondary data for purposes of collecting data.

The finding of the research revealed that most of the employees have little or no knowledge of the provision of the Act. Voluntary saving that will help many Nigerians are not made or encouraged.

However, most employees that are into the scheme believed that they are satisfied with the operation of the pension administrators thus, the researcher recommended that government should increase its contribution to its employees.

It is also recommended that copies of the Act should be made available to the public and employees to ensure that workers have good knowledge of the Act.

CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Prior to the enactment of the Pension Reform Act (2004), Pension Schemes in Nigeria had been bedeviled by many problems. The public service operated and unfounded defined benefits scheme and the payment of retirement benefits were budgeted annually. The annual budgetary allocation for pensions was often one of the most vulnerable items in budget implementation in the light of resources constraints. In many cases, even where budgetary provisions were made, inadequate and untimely release of founds resulted in delays and accumulation of arrears of payment of pension right. It was obvious therefore that the defined benefits scheme could not be sustained (Pension, 2007).
In the private sector on the other hand, many employees were not covered by the pension schemes put in place by their employers and many of these schemes were not founded. Besides, where the schemes were funded, the management of the pension funds were full of malpractices between the fund managers and the trustees of the pension funds (Pencom, 2007).

This scenario necessitated a re-think of pension administration in Nigeria. Accordingly, the pension was initiated in order to address and eliminate the problems associated with pension schemes in the country. The out come of the reform was the enactment into law of the Pension Reform Act. 2004. (Pen com, 2007).

The pension reform programme is governed by the key principles of sustainability, safety and security of benefits, transparency, accountability, equality, flexibility, inclusively, uniformity and
practicability (Pencom, 2007).

The pension Reform Act 2004, established the National Pension Commission (Pencom). As the body to regulate, supervise and ensure the effective administration of pension matters in Nigeria. It licenses, regulates and supervises pension operation of Ppension Fund Administrators (PF A), Pension Fund Custodians (PFCs), Closed Ppension Fund Administrators (CPFAs), existing schemes that are approved to continue by the commission and any other pension related institutions (Economic Confidential, Dec., 2007).

This study will give an insight to the new Pension Reform Act 2004, evaluate the effect of the contributory Pension Scheme on the Nigerian Public. The study will also look at the roles of key players in the new pension reform and assesses their contribution towards the development to the pension industry. Lastly, the study will provide an alternative approach to the new pension system in Nigeria.

1.2 STATEMENT OF THE PROBLEM
In line with the same policies adopted every where, the Nigerian government has introduced a new pension scheme, which amounts to privatization of pensions. Workers will no longer pay into a State
Pension Fund. Now they will depend on private funds that supposedly will make the money grow by investing it in stocks, shares and other speculative activities. What is worse is that if any of these funds collapse, the government provides no guarantee.

The new pension reform seems to be another anti-worker policy of the government, where the future of the workers is now openly tied to the whims and caprices of a series of emergency investors. These so – called Pension Fund Administrators and custodians have been licensed by the government to collect compulsorily a substantial percentage of workers’ salary every month which can be spent or invested in other ventures as the administrators so desire.

The new Pension Reform Act of 2004 is one of the numerous ‘reforms’ pushed through in 2004 to reduce government expenditure on the social welfare of the populace. The philosophy here is to allow the government to shelve a major social responsibility of catering for its workforce after retirement in the form of gratuity and pension payments.

Before now, the positions of things in the workplaces were in two forms, depending on which establishment the workers belong, that is, either the private or public sector. The situation in the public sector of the pre existing pension scheme is that a civil servant or worker working for the government will collect a certain amount of money worked out as gratuity depending on the number of years put into service. The gratuity is expected to be paid immediately the worker stops working. Pensions are also paid immediately on a monthly basis if the worker is of the “pensionable” age.

The situation in the private sector is different to what is obtained in the public sector. Here, what the worker collects at the end of his/her working life with the company is of a contributory format. The worker contributes a pre-defined percentage of the monthly basic salary to the pension fund and the employer also contributes as related percentage of the worker’s basic salary to the pension fund.

The worker will then collect the total contribution at the end of the work life with the company. The Act now makes it mandatory for all workers to pay 7.5% of their salary to the pension funds, the employer is also expected to contribute another 7.5% equivalent of the worker’s basic salary to the monthly contribution.
The reality is that for the workers in the private sector, it immediately translates into the workers getting less pay than what they are getting previously. The previous contribution used to be 4% but now it has almost doubled to 7.5%. in the salary of the workers.

Whereas, the new situation is almost anti-worker in the public sector. Here the employer, which is government at all levels, is being relieved of a major social responsibility of caring for its workers after retirement. Now the government workers must cough up 7.5% of their salary every month as a contribution to the pension fund.

To the workers in the public sector, the new situation as per pension contribution is a double blow. This is because, lifelong pension and gratuity is the only thing each worker probably still looks to as a mild compensation for the very poor salary package they are presently receiving as wages. To now say that they have to contribute for their pension, which will also not last till they die, from their present meager salary is most uncaring and callous.

Another fact is that the present contributory pension scheme is not guaranteed by the government. In the final analysis, it is not different from any other savings in the bank.

In order word, if the pension fund administrator and pension fund custodians should collapse, the pension fund under their care also collapse. That is the real situation and this is why the government is saying that if this should happen, it is the workers liability because it is the worker’s free will to choose his/her own Pension Fund Administrator (PF A).

This study will explain the operation of the new reform and also urge the public to be extra careful with the operation of the new reform. The study will also proffer an alterative approach to the reform should the current reform failed.

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Account Name: 3059320631