DESIGN AND IMPLEMENTATION OF A COMPUTERIZE TEACHER PENSION VERIFICATION SYSTEM. (A CASE STUDY OF ANAMBRA STATE PENSION BOARD)

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Pension is an arrangement of providing people with an income when they are no longer earning a regular income from employment. However, pensions should not be confused with severance pay; the former is paid in regular installments, while the latter is paid in one lump sum. The terms “retirement plan‟ or “superannuation‟ refers to a pension granted upon retirement.

Retirement plans may be set up by employers, insurance companies, the government or other institutions such as employer associations or trade unions. Retirement pension is referred to as retirement plans in the United States, as pension schemes in the United Kingdom and Ireland but in Nigeria, it is popularly known to as pension. Retirement pensions are typically in the form of a guaranteed life annuity, thus insuring against the risk of longevity. In general, the common use of the term pension is to describe the payments a person receives upon retirement, usually under pre-determined legal and/or contractual terms. A recipient of a retirement pension is known as a pensioner or retiree. Pension fund is any plan, fund, or scheme which provides retirement income.

The management (verification) of Pension Fund in Nigeria is as old as Nigeria itself. Pension fund was introduced by the colonial masters to provide income and security for old age British citizens working in Nigeria upon retirement as a post-retirement benefit to employees. In the view of Adesina, (2006), Nigeria’s legislative instrument on pension matters was the pension ordinance of 1951 which had retrospective effect from 1st January, 1946. In 1961, National Provident fund (NPF) scheme was established with the legislation to address pension matters in private organizations.

1.2 Statement of the Problem

The manual method of pension fund verification maintains or keeps records in a filing cabinet about each employee/pensioner that is registered with a Pension Fund Administrator (PFA). When an employee decides to open an account with a PFA for the purpose of retirement savings, the former (pensioner) has to go to the physical location of the PFA to obtain and fill a registration form.

Upon returning the form, the PFA clerk opens a file for the employee where the filled form and other vital documents as required or that relate to the employee are stored. The file is then passed on to the next PFA personnel to verify the employee’s registration which may take some days if not weeks as the case may be.

Using the manual method, the employee is unaware of his/her account balance except if he visits the PFA’s office. So, in case of financial impropriety in the employee’s account, there is no way he/she can track this. In the manual method, it is a bit cumbersome for the PFA to maintain an up-to-date record of employees/pensioners. When an employee switches job or changes location probably from one state to another, it takes time before these changes can be effected in the employee’s record. All these manual processes have resulted in problems such as:

• Theft and fraudulent practices in the process of investing pension funds andthe return on investments.
• Human errors i.e. in crediting of a pensioner’s account.
• Wastage of materials such as paper, files and so on.
• Lack of adequate information flow among PFA personnels .i.e. PFA’s are unable to give their customers clear information as to what their balance is and what is the estimated amount of money they will be collecting if they retire.
• The stress of pensioners having to go to PFA’s office.

A web-based pension fund verification system is a system designed to manage pension activities both on the customer’s and Pension Fund Administrators (PFA) ends. The pension verification activities on the part of PFAs include regular update of customer’s information, crediting of customer’s account if the customer is retired etc while customer’s activities include checking their balance online, making enquiries by sending mails, etc.

1.3   Aim and Objectives of the Study

The aim of the study is to design and implement a computerized pension verification system that will help to verify the information presented by the staff and resolve the problems of the existing system.

Specific objectives of the study are:

• To develop a secure system for staff information.
• To help the pension personnel to attend to many staff without being over worked
• To design a pension verification system where teachers’ remittance can be made on an agreed time interval.
• To keep the records and reports of staff for easy retrieval with increased data security.
• To enable the reduction in the amount of resources. This in turn will lower the cost of processing of teachers’ pension fund, since information will be stored in a database with reduced data redundancy.

1.5            Research Questions

The design and implementation of a computerized teachers pension verification system has been a controversial issue owing to its significance to pension sectors.

In view of this, the researcher intends to present the following questions:

1. How significant is the computerized teachers’ pension verification system for keeping the records and reports of staff for easy retrieval with increased data security?
2. How effective does computerized teachers’ pension verification system help pension personnel to attend to many staff without being over worked?
3. To what extent does pension verification system act where teachers’ remittance can be made on an agreed time interval?
4. Does the computerized teachers’ pension verification system enable the reduction in the amount of resources which in turn lowers the cost of processing of staff pension, since information will be stored in a database with reduced data Redundancy?
5. To what capacity does the computerized teachers’ pension verification system help the school personnel to attend to many students without being over worked?

1.5     Significance of Study

The project research having identified the problem that was existing in the old system of operation, is designed specifically to come up with a more resound and effective system that will not only counteract this problem but also provides a detailed future plan that will give room for more information technological improvement in the pension sector.

1.6     Scope of the Study

This research work is limited to providing a digital teachers’ pension verification system that will handle electronically staff record, to enable easy accessibility and information flow within the pension agency.

1.7     Limitation of the Study

This research work was limited to the researcher due to trespass and encroachment in personal details.

There are some constraints encountered during the research making such as time, stress, finance and material.

1.9     Definition of Terms

• Joint Tax Board:This is an approved body that monitors the activities of private sector pension schemes.
• Nigeria Social Insurance Trust Fund (NSITF):Provide and enhance social protection to private sector employees.
• National Pension Commission (PENCOM):Is an apex body of pension industry in Nigeria that regulates and supervises the business of pension companies.
• National Insurance Commission (NAICOM):It is an independent body responsible for licensing and regulating insurance companies in Nigeria.
• Pension Reform ACT 2004 (PRA):This is the body under the Pension Reform Act 2004 that regulates the activities of all pension matters.
• Pension Fund Administrators (PFAs):They are Private Limited Liability Companies licensed to manage pension funds under the Pension Act 2004.
• Pension Fund Custodian (PFCs): They are banks license to hold the pension fund assets on behalf of the PFA.
• Retirement Savings Account (RSA):This is where the monthly contributions of employees are kept for safe custody.
• Security and Exchange Commission (SEC):These are managers under pension scheme license to manage pension funds.

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