Implementation of Contributory Pension Scheme (CPS) and the Challenge of Appropriate Employeesi Pension Deductions in Nigeria: The Financial Managersi Review

Abstract

The study examined the reasons for the inappropriate employees’ monthly pension deductions among the employees in the various Ministries, Department and Agencies (MDAs) in Nigeria as provided by the Pension Reform Act 2014 as amended. Descriptive and analytical methods were used to analyse the data. The results showed that misinterpretation of the provision of the act on mandatory deduction of 7½ % from employees’ emolument by the MDAs is responsible for the inappropriate employees’ monthly pension deductions. Also, the results revealed that MDAs adopted different bases in the determination of the employees’ monthly pension contributions different from the basis adopted in the calculation of the employees’ monthly pension deductions by the employer in the Budget Office as stipulated by the Act. The study concluded that only the adoption of uniform basis between the MDAs and the Budget Office (employer) as provided by the Pension Reform Act 2014 can guarantee appropriate and correct employees’ monthly pension deductions among the workforce in the various Ministries, Departments and Agencies eliminate the under-deductions of monthly pension contributions and over-payment of gross monthly salaries.