Contrast between old and new pension scheme in nigeria pdf

Here is a contrast between the old and new pension schemes in Nigeria in a PDF format:

Contrast between Old and New Pension Schemes in Nigeria

Old Pension Scheme (Pre-2004)

• Coverage: Only federal civil servants were covered under the old pension scheme.
• Contribution: Both the employer and employee contributed 7.5% of their basic salary to the pension fund.
• Benefits: The old pension scheme provided a lump sum payment to retirees, which was calculated based on their final salary and years of service.
• Pension Fund Administrator (PFA): The old pension scheme was managed by the National Pension Commission (NPC) and the Pension Fund Custodians (PFCs).
• Investment: The old pension scheme invested in low-yielding instruments such as government securities and treasury bills.
• Withdrawal: Retirees could withdraw their pension benefits in lump sum or annuity.

New Pension Scheme (Post-2004)

• Coverage: The new pension scheme covers all employees in the public and private sectors, including state and local government employees.
• Contribution: Both the employer and employee contribute 15% of their basic salary to the pension fund.
• Benefits: The new pension scheme provides a defined contribution, where the benefits are based on the contributions made and the investment returns.
• Pension Fund Administrator (PFA): The new pension scheme is managed by licensed Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs).
• Investment: The new pension scheme invests in a diversified portfolio of assets, including stocks, bonds, and real estate.
• Withdrawal: Retirees can withdraw their pension benefits in lump sum or annuity, or use the funds to purchase an annuity.

Key Differences

• Coverage: The new pension scheme covers a wider range of employees, including those in the private sector.
• Contribution: The new pension scheme requires a higher contribution rate from both employers and employees.
• Benefits: The new pension scheme provides a defined contribution, which is based on the contributions made and the investment returns, whereas the old pension scheme provided a lump sum payment.
• Investment: The new pension scheme invests in a diversified portfolio of assets, whereas the old pension scheme invested in low-yielding instruments.
• Withdrawal: The new pension scheme provides more flexibility in terms of withdrawal options, including the ability to purchase an annuity.

Conclusion

The new pension scheme in Nigeria provides a more comprehensive and sustainable pension system, with a wider range of coverage, higher contribution rates, and a more diversified investment portfolio. The defined contribution approach provides a more predictable and sustainable pension benefit, and the flexibility in withdrawal options provides retirees with more choices.