The anatomy of pension fraud in Nigeria: Its motives, the management and future of the Nigerian pension scheme

Abstract

The study determined how the administration of the Pension Scheme could be perked up in Nigeria through effective management that would reduce fraudulent practices apparent in the scheme. By following the precept of library research via the survey design, a 5-point Likert Scale questionnaire was designed to educe primary information about pension matters from a sample of 435 knowledgeable respondents. The collected data were presented and analyzed. Three hypotheses were formulated and tested based on Multiple Regression Analysis models with the aid of Minitab version 17. The findings show that, despite the provisions of the Act (the Pension Reform Act -PRA), intents for committing Pension Fraud have not reduced to a significant extent. Also, the accumulated assets of pension funds have not been adequately diversified into profitable investment alternatives. Therefore, we recommend that, among other things, amendments should concertedly be made to the PRA to at least discourage acts of pension frauds by instituting severe punitive measures for culprits, while simultaneously inculcating moral ethics among public servants in Nigeria.Keywords: National Pension Commission, pension funds, pension fraud, Pension Reform Act, pension fund administrators, pension fund custodians JEL Classification: G23, G28, H55 * Correspondence to: E. Jeroh, Department of Accounting, Delta State University, Abraka, Delta State, Nigeria; e-mail: jeroh4laffs@gmail.com Ekonomski horizonti (2017) 19(3), 179 -191 180The CPS came in force through the enactment of the Pension Reform Act (PRA) of 2004, which again was revised by the PRA, 2014 (Onyeonoru, Matthew & David, 2013;Adeniji, Akinnusi, Falola & Ohunakin, 2017). G. Mesike and A. Ibiwoye (2012) avers that the design of the CPS is such that the associated risk/burden of retirement financing was shifted from entirely that of the Government to that majorly of individuals. Experts believe that the CPS is presumably better than the old pension scheme, except for the incidence of fraud and mismanagement.No doubt, various models and pension scams have evolved over the years given the changes evident in pensions and their attendant schemes (The Pension Regulators, 2015).In fact, the argument has been that an insight into the pension affairs of some Ministries, Departments, and Agencies (MDAs) clearly indicates the evidence of the pension fraud that has negatively affected the success of the CPS. The perpetrators of such pension frauds are partly the management, upon whom such funds have been entrusted. Their motivation for indulging in a pension scam may not be different from the same motivation identified with the other forms of frauds. K. Tasker (2012) observes that pension fraudsters feel that they have a need which is either a real financial need or a perceived need, such as a desire for material goods. While fraud and/or pension scams continue with a varying and alarming magnitude, it is believed that, if uncontrolled, their effect on the overall success of the CPS will be detrimental. I...

An appraisal of home ownership for senior citizens in Nigeria

“…The finding agrees with Agbata et al (2017) and alleged that the Nigerian Pension Scheme in recent times has been displaying proof of deceitful practices. The corrupt acts in the pension sector may have hindered access to the gratuity of some of the LISCs.…”

“…The corruption cases in the pension sector are endless, and in one of the cases, the National Judicial Council suspended the judge who gave judgement to a case for one year without pay for failing to put into effect “discretion judicially and judiciously” in the referred case. What becomes the fate of the retirees in a system that is “fantastically corrupt?” Agbata et al (2017) agreed that the Nigerian Pension Scheme in recent times has been displaying evidence of fraudulent practices. Akinjare et al (2016) found high-interest rate tagged to primary mortgage institutions (PMIs)-funded loans and cumbersome process in the National Housing Fund applications as some of the challenges that have hindered senior citizens’ home ownership.…”

“…Garba and Mamman (2014) suggested planning for retirement, estimating sources of income, developing a friendship, establishing a business in one's area of specialisation, amongst others as factors that will enhance one to own a home. Agbata et al (2017) recommended that the National Assembly should enact laws with a stiffer penalty such as life imprisonment with hard labour without an option, banish offenders from any political position or travelling overseas for vacations against corrupt officials. This may mitigate the corrupt practices and serve as a curb against possible pension fraudsters.…”

Sustainable Investment Strategies in Pension Fund Management: A Comparative Review of Esg Principles Adoption in the U.S. And Nigeria

“…Such challenges eroded contributors' confidence and placed a significant financial burden on the government. It became evident that a more sustainable and efficient system was needed, leading to the adoption of the Contributory Pension Scheme (CPS) in 2004 (Agbata, Ekwueme, & Jeroh, 2017). The CPS, inspired by the Chilean-Styled Pension Scheme, was a paradigm shift from the PAYG system.…”

“…A significant challenge that emerged post-adoption was pension fraud. The industry grappled with fraudulent activities, including the creation of ghost pensioners, embezzlement of pension funds, and other corrupt practices that threatened the very essence of the scheme (Agbata, Ekwueme, & Jeroh, 2017). These malpractices not only eroded public trust but also highlighted the need for robust regulatory oversight.…”