Work­ers should tar­get 75% salary as pen­sion – Re­port

Daily Trust - - BUSINESS - By Fran­cis Arinze Iloani

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.

Photo: NAN

Staff of Cor­po­rate Com­mu­ni­ca­tion De­part­ment, Na­tional Pen­sion Com­mis­sion at­tend to in­tend­ing re­tirees dur­ing the on­go­ing pre­re­tire­ment ver­i­fi­ca­tion in Port Har­court, Rivers State on Tues­day

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