Take ‘care-burden’ off your children…be part of CPS

The biggest thing to have happened to Nigerians in this generation is the coming onboard of the Contributory Pension Scheme (CPS). The scheme follows the Pension Reform Act of 2004 which was recently revised in 2014. Not only did the scheme change the face of pensions in the country, it exposed Nigerian workers to culture of savings that guarantees regular income at old age.

A major positive side of the scheme is its potential to reduce substantially the tradition of parents depending wholly on their children for daily up-keeps at old age because the parents never saved. It is coming handy again, at a time when generational change influenced by growing cosmopolitan culture is taking children away from home and availability to care for these aged people.

With the CPS therefore, Nigerians both in the formal and informal sectors have the opportunity to save for old age, not only to take the care-burden off their children, but also to enjoy independence and dignity of life in retirement.

The objective of the CPS is to ensure that every person who worked in either the Public Service of the Federation, Federal Capital Territory or Private Sector receives his retirement benefits as and when due. While for the informal sector or standing alone entrepreneurs, an arrangement is being made by the industry regulator, the National Pension Commission (PenCom) to accommodate them.

According to the National Pension Commission (PenCom), it is now mandatory with effect from 1 July 2014, for employers of labour and any organisation or business in the private sector that employs three persons or more to participate in the CPS. The PRA 2014 further provides that the contribution for any employee to which the Act applies shall be made in the following rates relating to his monthly emoluments – a minimum of 10 percent by the employer and a minimum of 8 percent by the employee.

If you have understood the operations of the CPS, then key into it or face a future that will be largely influenced by socio-cultural changes.

Demographic changes

A new demographic structure is emerging in the society, with declining family dependence among many homes, making it an indispensable the need for everyone to provide for his future. Common with Africa, relatives and families have been interdependent of one another for assistance and support, which created little or no need for long term savings culture, as a form of protection.

But with many families now going towards nuclear setting, and members of different families concentrating on taking care of their immediate relations, the extended structure that had held sway for many centuries back is losing strength.

There is therefore a growing cosmopolitan culture, where people have embraced western philosophy and modern life style, so large dependence on families for support has begun to wind down, so there is hunger more than ever for alternative sources of support.

Expert informed that the new generations of children have taken to live in cities like Lagos, Port-Harcourt, Abuja and overseas, as they embrace western life style, they would gradually think less of the extended pattern of living.

“It is common to find these days’ family sizes pruning down to four and five, unlike what existed in the past and that suggest that people want to keep smaller homes, so, the tendency that they will have that luxury to begin to look after aged parents in the future is in the decline”.

The implication of this the expert say is that people would now begin to think of how to provide for their future and retirement rather than want to depend on their children who may have chosen to live the city way of life.

To the expert, it requires that people begin to get educated on how to provide for retirement through a committed system of pension contribution and the likes, such that dependence on children and relatives for such support would be less if it must be.

If you do not therefore need to depend completely on your children or relations to feed, get your medication or be a kind of burden to anybody because of lack, you will be more respected, says a pension expert.

According to the expert, you don’t need to go and stay in a relative’s house for days to get financial assistance, to feed or to buy your medication if you can be part of the contributory pension scheme today.

The CPS was introduced to replace the old pension scheme, where employees had to rely entirely on the employer for monthly pension pay-outs after retirement.

The Act has recently successfully undergone an amendment in the National Assembly to take care of grey areas and have the objectives to: ensure that every person who worked in either the Public Service of the Federation, Federal Capital Territory or Private Sector receives his retirement benefits as and when due; (b) assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age; and (c) establish a uniform set of rules, regulations and standards for the administration and payments of retirement benefits for the Public Service of the Federation, Federal Capital Territory and the Private Sector”.

As at the December 2014, pension assets has grown to over N4.61trn, and over 140,000 had retired under the scheme as at June 2014 and are currently receiving pensions as when due.

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