Setting up a workplace pension scheme is a crucial step in supporting your employees’ long-term financial security and retirement planning.
A workplace pension provides a valuable benefit that can help attract and retain top talent, while also ensuring that employees are well-prepared for their future.
Retirement saving pension plans such as defined contribution plans are increasingly an integral part of most countries’ overall pension system, and in some countries, they are the main component of their pension system. This means that overall retirement income adequacy greatly depends on the pension benefits stemming from these plans.
A robust workplace pension offers employees a long-term savings plan with many benefits. It also helps to attract and retain top talent and offer your workforce financial wellbeing and peace of mind.
As a Nigerian worker, setting up a pension fund is an essential step towards securing worker financial future. A pension fund is a type of investment fund that is designed to provide you with a regular income in your retirement years. In Nigeria, the Pension Reform Act of 2014 made it mandatory for employers to set up a pension scheme for their employees.
A pension is a fund into which a sum of money is added during an employee’s employment years and from which payments are drawn to support the person’s retirement from work in the form of periodic payments. A pension may also be a ‘defined benefit plan’, where a fixed sum is paid regularly to a person, or a ‘defined contribution plan’, under which a fixed sum is invested that then becomes available at retirement age.
Pensions should not be confused with severance pay; the former is usually paid in regular installments for life after retirement, while the latter is typically paid as a fixed amount after involuntary termination of employment prior to retirement. So, a pension plan is a retirement account where employers and employees make monthly contributions.
The chief executive, Stanbic IBTC Pension Managers, Olumide Oyetan said, “As an organisation, one of our main objectives is to ensure that our clients retire well, which aligns with enabling our customers become homeowners. We leverage customer data and insights which help us to be proactive in meeting their needs. Our team works diligently to ensure that our clients can access a portion of their pension savings as equity contribution towards residential mortgage applications, if they meet the required conditions as prescribed by PenCom.”
Essential Steps To Set Up A Pension For Workers
Choose A Pension Scheme: Select a suitable pension scheme that meets your business needs and complies with regulatory requirements.
Register With The Relevant Authorities: Register your pension scheme with the relevant authorities, such as the National Pension Commission (PenCom) in Nigeria.
Determine Contribution Rates: Determine the contribution rates for both employers and employees, ensuring compliance with regulatory requirements.
Select A Pension Fund Administrator: Choose a reputable Pension Fund Administrator (PFA) to manage your pension scheme.
Communicate With Employees: Educate and communicate the pension scheme details to your employees, ensuring they understand the benefits and their roles.
Set Up Payroll Deductions: Set up payroll deductions to facilitate regular contributions to the pension scheme.
Monitor And Review: Regularly monitor and review your pension scheme to ensure compliance and make necessary adjustments.
With these steps, organisations can establish a pension scheme that supports their employees’ retirement planning and provides a valuable benefit for the organisation.
