Pension Reforms in Nigeria; Benefits & Challenges
Pensions are means by which individuals accumulate savings over their working life in order to finance their consumption needs in retirement, either by means of a lump sum or by provision of annuity, while also supplying funds to end users such as corporations or governments for investment purpose. The Administration of Pension in Nigeria have experienced inconsistency in policies due to its many challenges since inception- delay in payment of pensions and gratuities to deserving retirees in Nigeria fueled by lack of accountability, poor leadership, embezzlement of pension fund, inaccurate pensioners records and gross incompetence on the path of Pension Administrators.
This situation condemned many pensioners of the civil service into untold hardship, abject poverty and squalor. Many pensioners have resorted to begging for survival while some have died waiting for the payment of their pensions and gratuities. The forgoing led to the enactment of the Pensions Reforms Act 2014 to repeal the 2004 Act.
The Pensions ?Reforms Act 2014 was designed to achieve the following goals;
·????????Establish a uniform and sustainable pension system in Nigeria
·????????Ensure efficient and transparent management of pension funds.
·????????Promote saving culture among Nigerian workers.
·????????Promote wider coverage of Nigerian workers.
·????????Establishes strong regulatory and supervisory framework to secure through the activities of the National Pension Commission.
The 2014 Act makes provisions targeted that promotion of welfare of workers after retirement from active service either at the public or the private sector of the economy by introducing new features to ensure the attainment of the set goals and objectives.
Increase in Pension Contribution rate – the provision for an increased pension contribution rate from 15% to 18% of monthly emolument, where 8% will be contributed by employee and 10% by the employer. This will boost the amount that accrues to the Retirement Savings Account. Where an employer decided to pay the full contribution- the minimum contribution is 20% of the employee monthly emolument.
While safeguarding the future by boosting the retirement benefits of workers- there is a neglect of what the employee takes home after making the contribution of 8% and paying taxes among other lawful deductions. In the storm of hyper-inflation and non - compliance by many employers with the current national minimum wage. The burden of employees can be lessen by reduction of their contribution to a minimum of 5% of their monthly emolument. The burden on employers can be addressed by introduction of Incentives and reliefs to employers in total compliance in relation to pension contributions.
Employees of organizations with less than 3 employees as well as self-employed persons can voluntarily participate in the CPS under the Micro Pension Plan (MPP).?This is commendable and the ability of the employee to voluntarily make additional contribution to the scheme will encourage the saving culture.
The Act provides for heavier punishments for pension related offences. The legislative intention was to deter pension partners against mismanagement and discourage corruption in the pension industry in Nigeria. Recurring events shows that pension related offenders are yet to be dealt with to the full extent of the law. The Probe and prosecution of?Abdul-Rasheed Maina, the Chairman of the Presidential Pension Reform Task Team, which was set up to restructure the pension system in Nigeria and the Mismanagement of the Police Pension Fund are instances where the grievousness of pension related offences are yet to be established.
The option of fine should be removed from the Act for Pension related offences – This will send a strong message to stakeholder on huge responsibility involved and the significant effect of pension fund management on the welfare of retirees and the Nigerian Economy.
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Powers of the Commission.
The expansion of the Pension Scheme to Cover Employees in the Informal Economy especially in the private sector is provided for under the Act. In reality many workers in the informal sector of the Nigerian Economy are yet be covered by the Pension Contributory Scheme.
Benefits
Rights of Employees to Pension Benefits
?Ensuring income security for people during their old age is a crucial objective among the welfare goals of modern societies and public pension systems have become a foundation on which income security for older persons rests. The social security for the working class and older people is a huge responsibility that must be safeguarded like every fundamental human right.
The Pension Reforms Act, Regulations and Guidelines can only set the standards. Our commitment to social security for the working class and retirees is a collective responsibility of the partners by ensuring the beneficiaries of contributory pension rips the fruit of their labour.
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References
Ebun, S. (2012), “Pensioners Lament Their Plight” Vanguard, March 24. Ebun, S. “Pensioners Lament Their Plight” Vanguard, March 24, 2012.
Pensions Reform Act 2014.
Pension Reform Act (2014) “Issue and Matters Arising” July 23, 2014.
Stanley Aibieyi, Ph.D, An Overview of the Nigerian Contributory Pension Scheme (2004 and 2014 Pension Act)
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1 年An important area of consideration. Thank you for your valuable post ?? Adedoyin Adebayo