THE PROCEDURES AND WAYS OF PAYMENT OF PENSION AND GRATITUITY TO RETIRE CIVIL SERVANT IN ENUGU STATE
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The administration of pension scheme is not a contemporary phenomenal or practice. Memorably, it can be traced back to 13BC. The earliest record of payment of public sector pension dates back to the Roman Empire times when in 13BC, Emperor Augustus Caesar paid pension to the Military and loyal civil servants to boost their welfare. This was to secure the active loyalty of troops who were then the sole determinant of power in the realm and further conquest. Thus, it was a kind of reciprocal or compact arrangement. The pension was first paid from Augustus‟ personal funds and later taxes of 5% were levied on inheritances and 1% sales tax to meet the pension liabilities of the emperor. Three thousand denary was paid to Legionnaires after 20 years of active duty and 5 years in reserves. This had the effect of making beneficiaries‟ instant millionaires by the standards of the time.
According to Stephen (2012), the history of public pension in modern Europe started with disability compensation to soldiers. A good example was the scheme established by the British parliament in 1592. By the 18th Century all major European nations maintained some form of pension for their officer corps. However, these pension schemes were not very popular because of the perceived bias of the schemes for the military. The primary aim was to keep the military in total subjugation and commitment to the leaders of the time as military might guaranteed state power and sovereignty at the particular time in history.
Stephen (2012) maintained that in modern times, the United States public pension system, otherwise known as U.S. Social Security (Old Age, Survivors and Disability Insurance)
(OASDI) is a social security insurance created by the Republican Government of Franklin Delano Roosevelt in 1937 during the great depression, following the stock market crashes of the late 1920‟s and early 1930‟s. Retirement benefits payment is the largest component of OASDI.
The scheme was unfunded though as payment of retirees were financed by payroll taxes of current workers to enhanced their wellbeing or welfare depending on workers earning records at an age of retirement.
In Nigeria, Pension schemes were introduced into the public service in the early years of the 19th Century as evidenced in Pension Proclamation No. 14 of 1901 of the Northern Nigeria Protectorate and the Pension Ordinance No. 4 of 1902 of the Colony of Lagos and pension Ordinance 1951. Until 2004, there were a myriad of enactments that regulated the administration of pension schemes in Nigeria (Balogun, 2006). They include the Constitution of the Federal Republic of Nigeria, 1999 in Sections 173 and 210, the Pension Act Cap 346 Laws of the
Federation 1990, the National Provident Fund Cap 273 Laws of the Federation 1990 and the Nigeria Social Insurance Trust Fund Act, 1993 amongst others.
In order to have an in-depth knowledge and understanding of the direction of changes in pension reform, it would be useful to first of all understand the antecedents of pension system in Nigeria. In the public sector, (both civil and public services, statutory bodies), pensions were governed by the Pensions Act of 1979, later the Pensions Act of 1990 as amended by the Pensions Regulations of 1991. The Act provided for benefits in terms of gratuity and pension payments. Gratuity is a single, lump sum payment while pension is a periodic payment, normally on monthly basis for life (Olanrewaju, 2011). The scheme was a compulsory and noncontributory one, which created a right to monetary collection by public servants and an obligation on the part of government to make payment.
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