Dynamics of Public Administration

The pension plan in Nigeria was first established by the 1951 Ordinance, a legislation of the colonial government aimed at providing pension for public servants at their retirement. The instrumentality of pension as an instrument of providing for workers during old age or other debilitating circumstances that leads to reduced or absence of financial supply has continued from then till date, but with various modifications and reforms. The previous pension plans were of the defined benefit (DB) scheme, that is, they were entirely funded by the government through yearly budgeting. But, they soon became unfunded due to the competition of numerous programmes and projects of the government at all levels, coupled with endemic corruption in the system. The effects of these were the delayed and the non-payment of pension benefits to the retirees, especially those of the public sector; many of whom got frustrated and died. The private sector at that time did not fare better, as most of them did not make any provision for pension plans, except some who paid certain amount as severance pay. This article examines the Nigeria's new contributory pension scheme enacted by the 2004 Pension Act, with the view of identifying its associated challenges and prospects. The most recent Pension Act 2014 was also examined. However, it was found out that the contributory pension scheme was more advantageous than the non-contributory pension scheme, otherwise referred to as the DB scheme, although, with certain recommendations given on the optimal utility of the new scheme.