Employers need improved business environment to comply with pension law - Adediji

Adediji

Chuks Udo Okonta

Government at all levels have been called upon to create favourable business environment for employers to enable them meet up with the 2.5 per cent increased contribution to workers' Retirement Savings Account (RSA) provided in the recently signed pension law.

The Group Managing Director Pensionscope Group, Peter Tai Adediji, in statement made available to press in his office, said the increase from 7.5 per cent to 10 per cent to be made by employers, may be counter - productive if adequate measures are not put in place to improve the harsh environment on which employers operate.

He noted that many employers may default in meeting the requirement due to the heavy overheads they are presently shouldering.

He lauded the efforts of government in increasing the rate to be contributed to workers' retirement saving accounts and canvassed support for employers and employees through improvement of their well being to enable them comply with the new directive.

"This new law - PRA 2014, brought significant reviews to the 2004 Act. One of such is the upward review of the minimum rate of pension contribution from 15 per cent - with employee and employer contributing 7.5 per cent apiece -to a minimum of 18 per cent - with contribution from employee and employer increasing to eight and 10 per cent respectively. With this increase in rates of contribution, pension fund would now increase in size to the advantage of the employee and the economy as a whole," he said.

Adediji also called on employers and employees to embrace the scheme and make sacrifices that are capable of providing a secure future for workers.

"It is important for government at all levels to improve the living standard of the generality of workers in order to reduce the burden of the additional contribution. The present situation of workers where salary have been swallowed up by all sorts of loan to make ends meet before the next pay calls for special sober reflection.

"Many employees may want to disregard this opportunity of saving for their future and enjoy good life now. It is a wise decision to let enjoyment wait. Meet your basic necessities today and allow the luxuries to wait. Build your financial security now as tomorrow may be too late.

"Yes, it is a dilemma to want to eat your cake and have it; you cannot want to boost your pension benefit for tomorrow and not be ready to save for it today. There must definitely be an adjustment to your spending.　

"The Law has made good provision to more than enough compensate workers by making employers bear more of the burden on their behalf," he said.

Adediji urged workers to cultivate saving habits, in spite of the challenges confronting them, as a secured future can only be determined by today's savings.

"Planning begins when you are looking for job and you have the opportunity to make a choice. As you are looking for a company to work with and earn income to take care of your today’s needs, you must also look for that company that would give you retirement options for a better tomorrow when you would have retired, in addition to meeting today’s needs.

"You need to be financially independent even at retirement, if you don’t want to be a slave. You need to be empowered now and think of making the money made grow and take care of your future when you would have retired," he added.

He urged workers not to consider the extra increase in their contribution as financial burden, stressing that the government's intension was to provide them a blissful live at retirement.
Adediji, who is also a consultant with Ondo State Government on Pension matters, urged states that are yet to embrace the Contributory Pension Scheme to do so urgently in the interest of the people they govern.