Workers should target 75% salary as pension – Report
Arecent report on pension has suggested that workers should target a pension equivalent to a third of their salary when they retire.
The report published by Irish Life revealed that on average, people start saving for retirement aged 37. That, the life group says, is too late. In Nigeria, the National Pension Commission (PenCom) recommends that workers should take at least 50 per cent of their last salary as pension when they retire.
A mixture of inertia and concern about affordability and control of their savings means people start saving for retirement later and then put less into their pension fund than is required if they want it to deliver a “reasonable target” pension in retirement, says Irish Life, one of the largest players in the Irish pensions management business.
The report disclosed that 90 per cent of people in Ireland are not on track with their pension’s savings and this may even be worst in Nigeria where due to high unemployment, people secure employment late.
Recently, the House of Representatives upheld a motion urging the civil service to raise employment age to 30 years to enable more Nigerians gain employment.
By this report, many who may join the contributory pension scheme beyond 30 may not be able to get up to 75 per cent of their last salary as pension when they retire. Recently, PenCom approved the use of a new template by pension fund administrators (PFAs) for computation of pension and lump sum. The new template automatically generates 50 per cent of a contributor’s last salary as pension and what is left is paid as lump sum.
However, this report suggests that 50 per cent of a retiree’s last salary paid as pension is insufficient for life in retirement as the target should be 75 per cent.