SOCIAL SECURITY IN NIGERIA…THE ROLE OF THE PENSION SCHEMESOCIAL SECURITY IN NIGERIA…THE ROLE OF THE PENSION SCHEME
June 23, 2020
Having the assurance that you will be protected and secure when you are no longer active is everyone’s retirement dream. Unfortunately, several senior citizens in Nigeria are unable to live that dream as a result of not financially planning in their early years of service. Old age poverty poses an issue in society and a cause of concern for the Government as well as the general citizenry.
If we must significantly reduce the level of poverty and enhance the socio-economic development of the country, social security must be provided to alleviate the insecurity that comes with unemployment, poverty, and sometimes old age. The importance cannot be disregarded, as its benefits are enormous. In developed countries, it serves as a socioeconomic development program used to improve the standard of living, increase life expectancy, and eradicate social menaces in communities.
Universally, it is recognized as a Human Right as well as an economic and political necessity. The Universal Declaration of Human Rights and the International Covenant on Economic Social and Cultural Rights recognize the right to social security for everyone and definitely the elderly inclusive.
In simple terms, Social Security is a public provision for the economic and social welfare of the aged and unemployed, especially through pensions and other monetary assistance. Social Security provides individuals with a source of income when they retire or are unable to work due to unforeseen issues like health.
One of the policies of the Nigerian Government towards her citizen is ‘security and welfare of the people’. Driving social security initiatives has been one of the constitutional responsibilities of the Federal Government, hence the enactment of the Pension Reform Act. Before the Act was established, one or two welfare schemes like the Workmen Compensation Scheme, Nigeria Social Insurance Trust Fund (NSITF) were set up before the pension scheme in 1954 to enable workers in the public and private sector save for retirement.
Reformations of the scheme have occurred twice since its establishment, in the years 2004 and 2014 respectively in the hopes to expand its structure, improve the welfare of the pension contributors, and guarantee financial sustainability for their well being.
The objective of the Scheme covers everyone making a living – employees working in the formal sector as well as self-employed individuals in the country.
For those working in the formal sector, a Contributory Pension Scheme applies, whereby you as an employee make a minimum contribution of 8% from your emolument while your employer makes a minimum contribution of 10%.
For the self-employed, a Micro Pension Plan applies. Financing here works differently. As an Entrepreneur, you make the contributions to your micro pension account directly through a bank transfer or USSD payment method. This is following the set policies and legislation of the Pension Reform Act 2014.
One great thing about this scheme is the Employee Compensation Act (ECA), which was signed into law in 2010. The ECA contains provisions to ensure employees are compensated for accidents that occur at the workplace or in the course of carrying out their duty. This covers medical treatment in case of an accident involving no disability, rehabilitation, and payment of compensation for disabilities and death. What is even better is that all employers and employees in the public and private sectors are expected to benefit from the scheme.
We can categorically say that pension contributors are on the right path to attaining financial freedom and social security. If you don’t have a pension account, you are riding on a slippery slope. You should hurry now to open one. Click here to open a retirement savings account with us and enjoy a competitive return on investment plus an excellent customer service delivery. For more information or inquiries, please WhatsApp us on 07018000800 or send an email to email@example.com
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