The origin of
pension’s dates back to ancient time, the Holy Bible in the book of Numbers
8 vs. 25, stated “but at the age of fifty, they must retire from the
regular service and work no longer” and according to King James version, it
states” And from the age of fifty years they shall ceased waiting upon the
service thereof and shall serve no more”
Why then do people
view retirement as a wreck, the reason is that they have not save enough to
cater for retirement during old age. There is a strong connection between
planning, enough pension pot(Retirement Savings Account balances) and happy
retirement.
And according to
Robert Kiyosaki, in his book Rich dad, poor dad, he noted that “people work for
two reasons, to save for retirement and to make lots of money” Continuing
Kiyosaki noted that “an individual’s reality is the boundary between faith and
self confidence, and a person’s financial reality will not clear until he or
she go beyond the fears and doubts of his or her own self imposed limits. Those
self imposed limits are what limit the retiree from enjoying a happy an
successful retirement
Pension is an
important issue, as a time will come when you will longer be able to work, at that time , you fall back on your
pension .
What is pension? According to Wikipedia “A pension is a
fixed sum to be paid regularly to a person, typically following retirement
from service. There are many different types of pensions, including defined
benefit plans, defined contribution plans, as well as several others. Pensions
should not be confused with severance pay;
the former is paid in regular installments, while the latter is paid in one
lump sum.”
Continuing
Wikipedia noted that” The terms retirement plan and superannuation tend to
refer to a pension granted upon retirement of the individual. Retirement plans
may be set up by employers, the government or other institutions such as
employer associations or trade unions. Called retirement plans in the United States,
they are commonly known as pension schemes in the United Kingdom
and Ireland
and superannuation plans in Australia and New Zealand.
A pension created
by an employer for the benefit of an employee is commonly referred to as an
occupational or employer pension. Labor unions,
the government, or other organizations may also fund pensions. Occupational
pensions are a form of deferred compensation, usually advantageous to employee and
employer for tax reasons. Other vehicles (certain lottery
payouts.
The common use of
the term pension is to describe the payments a person receives upon
retirement, usually under pre-determined legal or contractual terms. A
recipient of a retirement pension is known as a pensioner
or retiree
The
following are the rationale for the Reform
Most public sectors schemes are unfunded
Unsustainable pension liabilities
Weak and inefficient administration of the scheme
in both private and public
Aging make defined benefit scheme unsustainable
Many workers in the private sector were not covered
by any form retirement benefits arrangement
Existence of diversified arrangement which were
largely unregulated in the private sector.
There was also mismanagement fund, corruption and
large scale misappropriation of public fund
There were no organized data base of the pension contributions
The idea of enacting the pension reform act 2004
came up when the committee set by the federal government in conjunction with
bureau of public enterprises’ on the sale of NITEL and NEPA. Discover that the
foreign buyers could not price it effectively because of huge pension
liabilities. Because one question they continuously ask is are you operating
define benefit scheme or define contribution scheme.
The committee to the presidency and the result was
formation of a committee to look into ways of reforming the pension scheme. The
result was the pension reform act 2004 this has been amended as Pension Reform
Act 20I4.
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