ABSTRACT
The research provides a conceptual and theoretical study of retirement policy and the problem of implementation in Nigeria public sector. It analyzes retirement policy in Nigeria public sector with a view to determining the effectiveness of the policy, its deficiency and challenges and proffering recommendations.
INTRODUCTION
Retires before the age of 50 years thereby accepting that employees could retire before attaining the age of 50, this kind of ambiguity could result in confusion. Retirement policy provides for the following)
Gratuity: In the Pension Reform Act, 2004 the right to a gratuity has been abolished. So retirees no longer receive single lump sum payment as gratuity in addition to pension which is a periodic payment, normally on monthly basis, for the remainder of the pensioner’s life. This is seen as being unfavourable to employees and discriminatory against poorer paid employees.
Contributory: This privatized and decentralized new pension scheme adopts the Chilean-style of pension scheme. The scheme provides for a compulsory contribution of 7.5% of workers’ basic salary and 7.5% of same from employers as pension for workers aer retirement.
However, while public sector workers contribute a minimum of 7.5% of their monthly emoluments, the Military contribute 2.5%. The public sector contributes 7.5% on behalf its workers and 12.5% in the case of the Military. Employers and employees in the private sector contribute a minimum of 7.5%
each. An employer may elect to contribute on behalf of the employees such that the total contribution shall not be less than 15% of the monthly emolument of the employees. This implies that the level of contribution is not uniform.
Level and Remittance of Contributions: An Employer is obliged to deduct and remit contributions to a Custodian within 7 days from the day the employee is paid his salary while the Custodian shall notify the PFA within 24 hours of the receipt of such contribution. There are already complaints by PFAs
of non-remittance of pension deductions on the part of some employers. Contribution and retirement benefits are tax-exempt. Again, Ahmed (2001) in the Summary of Proceedings of the National Workshop on Pension Reform reports that the studies which the Federal Government had commissioned to determine the level of contribution that could meet anticipated pension benefits report that 25% of gross emolument of all
government employees needed to be set aside annually to meet existing and maturing gratuity and pension liabilities, for adequate funding of the public service scheme. However, the Pension Reform Act stipulates a total contribution rate of 15% of total emoluments. This level of contribution is seems low and
inadequate.)
Voluntary Contributions: Section 9 (4) of the Pension Reform Act 2004 allows for voluntary contributions which gives opportunity for the self-employed and those working in informal sector organizations with less than 5 employees to open retirement savings accounts (RSA) with pension funds administrators
(PFA) of their choice and make contributions.
However, for voluntary contributions, the tax relief is only applicable if the amount contributed or part thereof is not withdrawn before five years aer the first voluntary contribution is made.
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