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How Pension Funds Administrators RIP Old People Off - Politics - Nairaland

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How Pension Funds Administrators RIP Old People Off by Jahlivesforever: 4:06pm On Sep 22, 2024
Mr. Okeke was a man who had spent his life working diligently as a director in the public service. After 35 years of service, he retired at the age of 60 with ₦20 million saved in his Retirement Savings Account (RSA), believing that this sum would see him through his old age. He looked forward to a peaceful retirement, secure in the knowledge that his decades of hard work would pay off.

However, upon retirement, Mr. Okeke was informed that he could only access 50% of his savings—₦10 million. The other ₦10 million would be spread over the next 15 years, paying him ₦55,555 each month until he turned 75. At first, Mr. Okeke tried to make do with this monthly payment, but as the cost of living continued to rise, and his medical expenses began to mount, ₦55,555 simply wasn’t enough.

By comparison, if Mr. Okeke had been allowed access to the full ₦20 million, he could have invested it in the same money market or treasury bills where his Pension Fund Administrator (PFA) invested. With a return rate of 15% per annum, Mr. Okeke’s ₦20 million could have generated ₦3 million annually, or ₦246,575 per month—more than four times the paltry ₦55,555 he was receiving from his PFA.

This meant that while Mr. Okeke struggled to pay for his medication and basic needs, the executives at his PFA were living large, driving expensive cars and enjoying luxury lifestyles. These executives, who managed the retirement savings of countless retirees like Mr. Okeke, were reaping the benefits of investments made with the retirees' money. They earned millions in returns each year while handing retirees barely enough to survive. For them, it wasn’t about helping old, frail people who had worked their whole lives—it was about profit.

After 15 years, when Mr. Okeke turned 75, his pension payments stopped. The system had been designed to assume that he would die by this age, but Mr. Okeke lived on, unsupported and increasingly frail. He had no income, no savings, and no way to afford the medications he needed to stay alive.

Meanwhile, the managing directors of his PFA continued to profit off the investments they had made with his money. They lived in luxury, vacationing in exotic locations, hosting extravagant parties, and expanding their business empires. The very money that could have kept Mr. Okeke alive and healthy had been used to line their pockets.

At the age of 80, Mr. Okeke passed away, not from old age but from lack of care. His family could not afford the medical bills, and the system that was meant to support him in retirement had failed him. He had spent his life building a future, only for it to be stolen from him by those entrusted with managing his savings.

If only Mr. Okeke had been given control of his full ₦20 million, his story could have been different. Instead of receiving a meager ₦55,555 per month, he could have earned ₦246,575, enough to cover his medical expenses and live with dignity. But the system had been designed to enrich the wealthy few while leaving retirees like Mr. Okeke to struggle and suffer.

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Re: How Pension Funds Administrators RIP Old People Off by Jahlivesforever: 4:06pm On Sep 22, 2024
This is the current state of PFA retirement plan in Nigeria
Re: How Pension Funds Administrators RIP Old People Off by kingsways: 4:15pm On Sep 22, 2024
Another big issue is the real value of people's pension contributions has been severely hit by high rates of inflation and crash in the value of the Naira

N20 million today is worth less than half what it was worth 15 months ago in USD terms
Re: How Pension Funds Administrators RIP Old People Off by maclatunji: 4:35pm On Sep 22, 2024
Nice write up OP, sadly most pensioners would lose that N20 million very quickly. I am not suggesting that positive reforms cannot be made but we should not run from one problem and create a larger one.
Re: How Pension Funds Administrators RIP Old People Off by LadyExcellency: 4:47pm On Sep 22, 2024
maclatunji:
Nice write up OP, sadly most pensioners would lose that N20 million very quickly. I am not suggesting that positive reforms cannot be made but we should not run from one problem and create a larger one.

He said he would've invested it in tresury bill. Why should tresury bill yield more than pension fund administration?
Re: How Pension Funds Administrators RIP Old People Off by bestlary(m): 5:00pm On Sep 22, 2024
Content addresses important elements.
Re: How Pension Funds Administrators RIP Old People Off by Asquare84(m): 5:48pm On Sep 22, 2024
Wrong analysis, who told the op that pension of a retiree stop after 15 years? Pension is designed for life. Don't give wrong info you know little about.
Re: How Pension Funds Administrators RIP Old People Off by ednut1(m): 6:07pm On Sep 22, 2024
Beer parlor analysis. What happened to the initial 10m If he had the full 20m. He would have spent it all before year 5. Treasury bills interest are not constant too. The PFA outperform treasury bills because they invest in other forms of securities. From 2021 to 2023 tb rates averaged 4-7% ( check CBN website).


The issue here is Mr okeke who was well paid and did not have other investments to take care of his old age, all his children nko.

*2021 TB Average per CBN website

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Re: How Pension Funds Administrators RIP Old People Off by maclatunji: 7:49pm On Sep 22, 2024
LadyExcellency:


He said he would've invested it in tresury bill. Why should tresury bill yield more than pension fund administration?

And the pensioner would have been living on what income while the N20m was invested? This is not ABC or 123. It's not as simple as posted by OP. Otherwise, even the N10m would have gotten the pensioner N1.5m, innit?

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