Dear Employee, Are You Pensionable?

Yesterday, we had an interesting discussion at our Youth Fellowship on the topic, “Youth and Financial Prudence” which was anchored by an accountant and an economist, both members and elders of the church invited to speak to the youth. I couldn’t participate till the end of the service to share a very vital piece of information, during the open session, with my fellow youth and as their leader because I had another speaking engagement to attend to. I decided to instead pen this and publish on my Medium, and then share with persons concerned. Please, if you chance upon this article and you’re a young employee, pay rapt attention to what I’m about to share with you.

1. This piece particularly goes to young graduates who are into teaching or doing other menial jobs just to meet ends pending when a “bigger” job comes their ways. Did you know that teaching at that private school you are, or working as a fuel attendant in that filling station, you’re pensionable?
2. Just as a friend of mine started off in his own enlightenment about the topic where I drew my inspiration, every sector in Nigeria is regulated by a body constituted by the government and backed by an Act. In order not to be shortchanged, one must know the laws establishing and guiding the sector one belongs to so as to know one’s rights.
3. It doesn’t matter where you are working or what you are doing, inasmuch as you’re working and receiving salary at the end of the month, you’re considered an employee and according to the Pension Reform Act, 2014 (as amended), you’re entitled to participate under the Pension Scheme. According to the Act that guides the rights of an employee pertaining to pensions and retirement, in any public or private organization with a staff strength of 15 members or more working there, employees are entitled to pension. Furthermore, employees of organizations with less than 3 employees as well as self-employed persons are also entitled to participate under the Scheme.
4. As an employee of an organization with a staff strength of 15 members or more, your employer is mandated by law to pay a minimum of 10% into your Retirement Savings Account (RSA), monthly, and also deduct 8% of your salary and save it on your behalf in your RSA as your retirements benefits. These rates are agreed upon by both the employee and their employer and the rates can also be revised upwards from time to time. You as an employee could also make voluntary contributions to your RSA.
5. Let me put this into context for your understanding. Shadrack graduates from the university and decided to accept a teaching job at ABC International School in the interim until he could secure a bigger job. The school management and Shadrack agreed on a salary of N50 000. By the way, the total number of persons working in the school both as academic and non-academic staff is 25. It means the school is by law mandated to establish pension scheme for its staff members. If none, then that isn’t an organization to work for. If there is, ABC International School is mandated by law to pay 18% of N50 000 (being Shadrack’s salary) into his Retirement Savings Account as their contribution to Shadrack’s retirement. 18% of N50 000 is N9 000. Apart from this 18%, Shadrack is also expected to deposit 8% of his salary into his RSA as his own contribution to his retirement; that is done by his employer by the way. 8% of N50 000 is N4 000. This means every month, Shadrack receives N13 000 monthly in his RSA as his retirement benefits. In a year, it sums to N156 000. If Shadrack works in that school for, say, 6 years and gets a better job and leaves, his pension benefits at ABC International School amounts to N936 000. If Shadrack spent his whole 35 working years at ABC International School and retires, he’s supposed to leave with a retirement benefits of N5 460 000 (5 Million, Four Hundred and Sixty Thousand Naira).

Why am I writing this? Because I have friends teaching at private schools with no pension scheme in place. I want to inform them that it’s not only civil/public servants that are entitled to pension; every employee in Nigeria is entitled to participate in the pension scheme irrespective of the nature of their job. Furthermore, as a youth apply jobs at organizations that are pensionable because you can easily be stuck with them. When this happens, you have nothing to lose when leaving after spending a very long duration of time there. The good thing is, you can as well sue your employer when they aren’t adhering to the laws of the Pension Reform Act. It’s quite unfortunate that most Nigerians think the only thing they’re entitled to from a job is the monthly salary. Ignorance is really killing us in Nigeria; and it’s the reason a lot of people are poor and suffering. Do you have a pay slip? Check to see what is going on there. Check that of your mother if she is working as a cleaner in any private or public organization. Do that for your ignorant father who works as security in any establishment. Every employer knows about the Pension Reform Act but only few have adhere to the Pension Reform Acts. Don’t be exploited, know your rights as an employee. More importantly as a young person, don’t spend your youthful age in an organization with no pension arrangement for its staff, especially when the monthly emolument is poor.

SUMMATION

a. In a private organization with 15 staff members or more, employees are entitled to participate in pension.

b. Employees of organizations with less than 3 employees as well as self-employed persons shall be entitled to participate under the Scheme.

c. Pension Scheme isn’t only for Public Service of the Federation, the FCT, States and Local Governments; Pension Scheme is also applicable in any private sector recognized by law.

d. The rates for monthly deductions are as follows: minimum of 10% contributed by the employer; minimum of 8% contributed by the employee.

e. The rates are agreed upon by the employer and employee and can also be revised upwards from time to time.

f. Employee could make voluntary contributions to his/her Retirement Savings Account (RSA).

g. Monies are paid 7 days from the day employee is paid his/her salary.

h. An employee has no access to his/her savings in their RSA except through their Pension Fund Administrator (PFA).

I. Employee can’t withdraw his/her savings until they attain the age of 50.

j. Get the Pension Reform Act on the Internet and be more knowledgeable about pension, and then start working towards your retirement age.

Credit: Shadrach Bako, for the inspiration drawn from your explanation and story about your friend who was exploited by her former employer.