Workers must start thinking beyond pension – Iheama
Dr. Chidi Iheama is the Executive Director of the Institute of Retirement Management (IRM). In this interview with he speaks of the need for retirees to be equipped with entrepreneurial skills while in active service for a fulfilled retirement. cannot continue like that, because when revenue is low, budget for gratuity and retirement benefits is low and that was one of the problems we had with the old scheme.
With the new scheme now, it’s like civil servants investing in their own future and managed by government through the different Pension Fund Administrators (PFAs) and it is fairly guaranteed since it is through government bond. However, while the scheme is salutary, it doesn’t automatically mean that retirees should concentrate on it owing to the inflationary nature of a developing country like Nigeria.
What is assessment retirement pension in Nigeria?
When we talk about retirement and pension scheme, in classifying it you will realise that the old pension scheme was problematic and difficult for government to settle retirees in time. Then the new one is fair enough. Nevertheless, wages in this part of the country is low because under the contributory scheme, it is what you contribute that you enjoy and the contribution is less than 15 per cent. So, ultimately what is required is creativity, and civil servants under this scheme are not many, and that is why we are bringing people into the informal sector to key into the vision of the institute of having alternative means of survival. your of and
How do you see the contributory pension scheme in Nigeria?
It is one of the best things that have happened to the country. Unlike the old pension scheme that was dedicated on government’s budget, the new one is different. We know that Nigeria is a mono economy where oil gives us more than 80 per cent earnings and we know that oil is a volatile product as economic forces can gang up to either shrink or increase the price and we
Low income earners hardly retire with sufficient pension. What is the institute doing to prepare workers for retirement?
One of the problems with the civil servants is that they are manually driven, that is, government rules and regulations which are the guiding principle because civil servants are not willing to take risk.
That is why we emphasise the principle of entrepreneurship and calculated risk. That is, risk within the rules and regulations of the organisation, which will make civil servants entrepreneurial workers and be able to take initiative that will guide them into retirement.
For instance, civil servants who retire from the Ministry of Agriculture can get into the agricultural value chain, others that retire from the Ministry of Industry and Trade, those elements of commerce they manage for the government can be internalised so that upon retirement they will initiate themselves in this venture.
Unfortunately, because they are not entrepreneurial, they don’t think towards that direction. Therefore, we at IRM want to make them realise they cannot live on passive income.
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What do you passive income?
Passive income means per diem and other allowances for oversight projects and of course when you’re retired those incomes are no longer there. So it is our duty, as an institute, to make them realize that these incomes will not be there forever, and to start looking for alternative sources of income because retirement is best managed when one is still in active service.
There are several businesses that civil servants can plan against while they are in active service- poultry, livestock and other businesses - that can be profitable owing to the high rate of unemployment that is bedevilling our country. So, the idea is to change the mind set of civil servants to have something to fall back on after retirement, it is a possibility, it has been done in India, South Korea, Indonesia and can be done here.
Recently IRM signed an MOU with a university to run post graduate studies in management, what informed your decision?
The institute, being a practical knowledge institution, we realize that retirement is a practical issue and it happens within a changing context of the environment and so any knowledge that will be given to retirees has to be in tandem with changing environment. So we found it necessary to collaborate with Nasarawa State University to run executive post-graduate programmes to prepare retirees on how to be entrepreneurial at retirement.