Pension Costs in the Nigerian Public Service

Abstract

This paper examines the concepts of pension costs in the public service. The methods and procedures adopted in the determination of pensions and gratuities in the public service are also examined. Some theoretical and empirical works have been reviewed on the basis of the identified major independent variables such as salary grade level, service years, annual starting basic salary, annual terminal basic salary and age at retirement. The two categories of retirement: chronological age and service years are also examined by this paper. Discussion is on the concept of pension costs, provisions of the Pension Reform Act 2004, pension funding and accounting, pension costs in the public service, and retirement benefit plan accounting and reporting. The conclusion is that although various actions have been embarked upon by government towards the improvement of the welfare of pensioners, most of the state governments are yet to adopt and implement the provisions of the current Pension Reform Act 2004. Furthermore, to avoid delayance in the payment of pensions and gratuities to deserving pensioners, pension funds should be treated as a separate heading in the yearly budgetary provisions. Recommendations are on: the adoption of the provisions of the current Pension Reform Act 2004 at the state level; the establishment of data banks for all the retired civil servants; training and retraining of pension officers; the introduction of regressive pension discrimination: and a further research into the relationship that exist between the variables that are used in the computations of pensions and gratuities.

Keywords: Pension, Actuarial Gains, Service costs, Interest Costs, Amortisation Amounts

JEL Classification: H55