Employee perception of the defined contribution pension scheme in the public sector

Abstract

There has been a gradual shift the world over of Occupational Pensions schemes from the Defined Benefits to Defined Contribution. This initially occurred in the Private Sector but lately Public Sector Occupational Pensions Schemes have embarked on the process of conversion with the aim of ensuring that there is equity in sharing cost of funding the schemes benefits between the employer and employee thus reducing the financial strain on the Government. The objective of the study was to establish the employee perceptions to the new Defined Contribution pension scheme from the previous Defined Benefits pension scheme. The research used descriptive survey design to explore the employee perceptions. The target population for this study were the employees in the Public Sector Occupational pension schemes registered by the Retirement Benefit Authority (RBA). The primary qualitative date on the employee perceptions was collected using self administered questionnaires with close ended questions. The date was analysed using descriptive statistics. Statistical tools such as mean, percentages and standard deviation were computed with the aid of Statistical Package for Social Science (SPSS) software. The survey shows that the conversion from the previous DB scheme to the new DC scheme had an impact on the employee. The conversion to the DC scheme moderately affected employees in the Public Sector Occupational Pension scheme. However, for a number of employees the previous DB scheme met their expectations to a moderate extent as opposed to the new DC scheme mainly due to the fact that for the DB scheme, they employees knew in advance what their benefits were which is not the case in the DC scheme. For the mobile workers who often move from one job to another, the DC scheme was the preferred choice. The study recommends that the Government should provide ample time for the occupational pension schemes to first understand the implications of the conversion and from that stand point cascade the information to its employees. In addition the study recommends for more sensitization of employees on the benefits of the new DC scheme as it was clear from the study that the new DC scheme did not meet the expectations of the respondents.