Career Opinion On Pension : Why you should not rely on pension?

Pension Reform Act 2014 is an act that makes it compulsory for employers to remit 10% of monthly emolument given to their employees to a pension administrator while employees are expected to contribute 8%, making 18%. 

This contribution becomes contributed fund and expected to be invested in FGN Securities such as FGN bonds, treasury bills, local money market securities like banks, commercial papers and mutual funds which encompasses real estate properties, private equity fund, infrastructure fund, cash and other assets. 

This section shows that Nigeria is not in par with the developed countries such as the United Kingdom, where retirees are allowed to access entire pension at 55 years and for entrepreneurial older workers that can signal the start of an exciting new adventure. Retirees who transited in the United Kingdom were mostly driven by the need to apply their experience and skills gained during professional career to augment their pension income. If you are one of the working population in Nigeria who believes that contributed pension fund will be withdrawn from the Pension Fund Administrator without leaving anything behind you have to rethink. 

A 51 years old retiree (retired with a private company) shared his encounter with Enterprations recently. He approached the PFA with the hope of collecting his pension that has reached over N1.2 million. To his surprise, he was informed of having access to half of the fund because it is not less than a million. According to the PFA, the outstanding would be released to him every month based on the assumed remaining years he will leave. Our analysis reveals that he would be collecting N3, 846 as stipend every month when we considered 13 years as expected life span based on the 2016’s Nigeria life expectancy rate. How can he bridge the gap between desires and what is available? One of the key solutions is to fall back on the experience and skills he has gained. 

These need to be translated into products or services that people will buy. For those who are still working particularly public workers, investing in small business and manage through ‘oversight model’ should be prioritized because government retirement programmes are inadequate in equipping retirees in terms of ability to plan and set up new business after retirement to take care of self and family. 

Current employees can also get ahead by exploring opportunities in agriculture and pursue the realities from the outset. 
Career Opinion On Pension : Why you should not rely on pension? Career Opinion On Pension : Why you should not rely on pension? Reviewed by Muyiwa Abodunrin (Muyilight) on 09:28:00 Rating: 5

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