What are the Problems Of Contributory Pension Scheme In Nigeria? – The pension scheme is something that is yet to become standard (in various regards) in Nigeria, and it is something that affects almost all Nigerians. While some countries are getting it right already, there are some others that are still unsettled as far as the efficiency of the system is concerned, and Nigeria is simply one of such.
Nevertheless, it is everyone’s concern, as it affects us all one way or the other (either directly or indirectly). It doesn’t matter if you are currently young or old – either you or someone associated with you will still need a pension at some point in time. Hence, it is reasonable to try familiarising yourself with, and knowing about the challenges of the new pension scheme in the country, so as to be prepared beforehand, and avoid stories that touch the heart later on. Just strive to read this to the end, and learn about the vital developments that have been made to the pension scheme (and ensure you take note of them).
First, let us introduce the concept of a pension scheme and how it is meant to work.
Pension Scheme In Nigeria
Generally, when we are talking about a pension, we are ideally talking about a payment that is made by the government of a country to her retired citizens.
So, it is simply an arrangement or a system that has been put in place (during the period when a person is still actively working in the workforce), that ensures the citizen deposits a percentage of what they earn to a unique fund. Now, when they cannot work again after a period of time (due to reasons such as age, such as health, etc), such will receive assistance from the government of the country.
So, it is a simple thing. As you work in your prime, you provide money to the government, and they are bound to refund back to you when you can’t work again. This is how it is meant to be in all parts of the world (and our own Nigeria is not exempted). Nevertheless, we here are still battling with getting it right, and we keep struggling to make it work. The government here is, on various occasions, weak (as a result of economic or social crisis), and as such, cannot fulfill their part of the obligation as at when due (which put many of our parents in very tight situations when they should be sitting back to enjoy their pensions)
Pension Fund Administrators in Nigeria and its Evolution
The concept and issues that are attached to the contributory pension scheme in our country, did not start today, and to some extent, is not peculiar to us alone. That is to say, there are some other climes that face some problems as regards pensions every now and then.
Pension is regarded as a number of funds contributed by workers that they are entitled to after some time. Apart from getting the money when they become eventually old and retired, there are some that have to do with stuff like widowhood, sickness, etc.
Gazing deeply into the Nigerian pension system and pension fund administrators here, one will see that it didn’t start recently, but from the colonial times. It was actually brought about by the British Landlords in 1861 (don’t forget that Nigeria was colonized by the British). The major essence was to ensure that it guarantees a reasonably normal retirement age.
Nevertheless, when the country picked her independence back then in 1960, there have been changes in the system (as it was in various other aspects).
Problems Of Contributory Pension Scheme In Nigeria
The pension reform act actually gave birth to a brand new pension scheme in Nigeria. Nevertheless, this one is still struggling and unstable. Things are not moving appropriately as they were in countries such as the United States of America, Britain, France and so on.
In Nigeria, the first set of retirees began to benefits from the contributory system back in 2007 (via the new scheme). Right now, thousands of pensioners have benefited from this new pension scheme.
Nevertheless, it is not flawless, and one of the major problems attached to it has to do with the system of pension calculation. What the new scheme offers is a 50% lump sum payment of all retirement benefits to those who have retired. Additionally, it was made known that there exists a big gap in this retirement system (so, many are being paid little when compared with what it used to be under the old pension scheme).
Everyone knows that one of the problems we are facing in this country has to do with corruption. The old pension scheme was stained with various corrupt activities. Unfortunately, it has been brought to the new one too, and it is affecting its efficiency (which is something corruption does).
For Pension Funds Administrators, it is glaring that they are still not set to adapt to the financial systems of the contributory system. We should note that many issues of this scheme came about as a result of a lack of resources. One other difficulty attached to the pension scheme has to do with the government not able to appropriately build the economy of the country to the extent of ensuring the smoothness of pension distribution.
As we all should know already, issues with the Nigerian economy can influence not just issues that have to do with pensions, but even various other aspects of life. So, for the sure development of pensions, there exist two major things that must be put in place (they are budgetary funds and stable economy)
Although this new pension scheme came with a lot of huge opportunities, the problems attached to it keeps making it inefficient. Corruption is one of the major issues, and it was unfortunately inherited from the system that used to exist. If all of these issues can be eradicated as soon as possible, things will simply be fine, and young people, in particular, will benefit immensely, as there are lots of opportunities for them today.
That’s all on the Problems Of Contributory Pension Scheme In Nigeria.
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