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Types Of Pension Scheme In Nigeria

Types Of Pension Scheme In Nigeria

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The discussion about the pension is one that has been around for tons of years now. It is a periodic fund payment that is given to a person who retires from their employment as a result of factors such as disability, age, etc. 

As people work in their prime, they are always advocated to look beyond now and think about their future, when they won’t be able to continue being there. The idea is to strive as much as possible to plan ahead for the time when they will become unable to work again. It is unpleasant when one sees elderly people begging for money to survive, or still indulging in strenuous activities to put food on their table. One of the mechanisms to prevent such is the idea of pension schemes. 

The pension reform act (PRA) gave birth to the New Pension Scheme that replaced the former system. Although this new scheme is yet to be appropriately balanced in our own society, it is interesting to note that since the first set of pensioners benefitted from it back then in 2007, thousands of people have reaped the benefits of the contributory system till this moment. Indeed, the new pension system in the country offers great opportunities to people, and there are many more possibilities in the new pension scheme for young folks.

Here are the types of pensions available: 

Types Of Pension Scheme In Nigeria

  • Retiring Pension

This is a very popular type of pension in Nigeria that has been put in place to cater for workers when they eventually retire after serving for a long time. It is granted to a worker who is allowed to retire after completing a specific duration of qualifying service. In the country, the duration is between 30-35 years.

  • Superannuating Pension

Here is another type of pension that a worker can only get when they retire at the prescribed age limit of between 60-65 years.

  • Compassionate Allowance

This is a unique one, and just as its name suggests, it majorly has to do with being compassionate to the beneficiaries. Not every worker is given this, but only those who were sent out of service for misconduct or any other abnormalities. So, here is the logic, since they won’t be able to complete the required duration that will fetch them their regular pension, then this one is given to them to compensate. 

  • Compensatory Pension

For a worker to obtain this, it has to be that his or her permanent post was abolished and the government was not able to offer them a suitable alternative placement elsewhere. 

Pension Custodians in Nigeria

Here are some genuine (because they are verified) pension firms in the country:

  •  National Pension Commission – Wuse 11, Abuja 
  •  Pension Alliance Limited – Victoria Island, Lagos 
  • Stanbic IBTC Pension Managers 
  • Apt Pension Fund Managers – Garki, Abuja 
  • ARM Pension Managers – Ikoyi, Lagos
  • AXA Mansard Pensions Limited – Garki, Abuja
  • Certified Pension Institute of Nigeria – Ilupeju, Lagos
  • Crusader Pensions Limited – Victoria Island, Lagos
  • Fidelity Pensions Managers Limited – Victoria Island, Lagos 
  • First Guarantee Pension Limited – Ikeja, Lagos 
  • Fug Pensions Limited – Yaba, Lagos
  • Leadway Pensure PFA Limited – Surulere, Lagos
  • Legacy Pension Managers Limited – Wuse, Abuja

Challenges Facing Pension In Nigeria

So, let us discuss some of the issues facing the issues of pension in the country. Before the Pension Reform Act, 2004 was enacted, it is widely known and agreed that pension schemes in the country had been mischievously battered by several problems. Our government used an unfunded specified benefits scheme and the payment of retirement benefits was budgeted every year.

What was allocated each year for pension was, unfortunately, usually one of the most vulnerable items when it is time to implement the budget (because of the issue with the availability of cash). Let us even consider times when budgetary provisions were eventually made, it is unfortunate that untimely release of the necessary money brings about delays of pension rights, and we end up seeing pensioners begging around for what is theirs. 

We should also consider the fact that for many workers in the private sector, they don’t even have a pension plan at all, which is very dangerous for their future. There are even some employers who deduct these monies from the salaries of their workers, but won’t, unfortunately, use it for the right thing, exposing these people to avoidable hardships. 

Therefore, there are a lot of workers here who are not appropriately preparing for retirement (unlike their counterparts in places like the United States of America and the United Kingdom). For instance, in the USA alone, it has been said that a handful of their working-class already has a retirement plan. In Nigeria, it was made known that we have close to seventy million workers in the market, and it is not too pleasant to note that out of these large numbers, only about 7M have a retirement plan (it is so bad). 

Some years back, the normal thing is where the pension account was majorly topped up by the employer of the worker. In the case of those working for the government as civil servants, the government will take care of it. Due to its inadequacies, a co-funded system was brought up to solve the issue. 

Nevertheless, we keep wondering why it appears that many of us are not thinking about getting set for retirement. We can’t but agree that there are different reasons for this. There are some of our people that don’t actually know how they can get pension plans.

Due to the way the system currently is, there are a lot of firms that have the confidence that nothing will be done to them even if they failed to offer their employees pension plans, even though the government has told them to (and it is in the law). 

The NPC has stated before now that it has got wind of some private employers that are not remitting their contributions to employee pension accounts. Unfortunately, when it accumulated, they find it tough to pay everything – and it causes avoidable issues. Unfortunately, it appears the NPC is just a toothless bulldog, as these defaulting guys keep doing their things with the boldness that nothing can be done to them (and indeed, for many of them, nothing is usually done to them). 

Conclusion

In conclusion, steps must be taken to eradicate mismanagement and misappropriation of funds that are meant for employees’ pensions if we want to see good results. 

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