The Effects of Contributory Pension Scheme (CPS) on Workers’ Performance: A Study of Edo State Public Service

Abstract

This paper undertakes a detailed examination of the effects of the Contributory Pension Scheme (CPS) on performance of workers in the public service of Edo State, Nigeria. The Contributory Pension Scheme was introduced nationally by the Pension Reform Act of 2004, and subsequently re-enacted as the Pension Reform Act of 2014, to replace the Defined Benefit Scheme (DBS) that had governed public service pension administration in Nigeria for several decades. The paper adopts a descriptive and analytical methodology, drawing on statutes, regulatory guidelines issued by the National Pension Commission (PenCom), scholarly journal articles, textbooks, and institutional reports, to interrogate the manner in which the scheme has been implemented in Edo State and the effects it has produced on the welfare, morale, and retirement security of public servants in the state. The paper is anchored on a single theoretical framework, the Life Cycle Hypothesis, which explains the rational basis upon which individuals save during their productive years in order to sustain consumption after retirement. The paper therefore concludes with a set of recommendations which states that Edo State Government should ensure the prompt and regular remittance of both employer and employee pension contributions to Pension Fund Administrators, in order to prevent shortfalls in the accrued benefits of contributors and to preserve the integrity of the scheme, the National Pension Commission, in collaboration with relevant state agencies, should strengthen monitoring and enforcement mechanisms to ensure full compliance by the Edo State Government with its remittance obligations, including the imposition of appropriate penalties for persistent default and among others.