Gratuity And Pension Rules In Nigeria

Pensions and gratuity constitutes the benefit to employees in the Public Service. It involves the building of a stock of funds from the employees stipends over the years of engagement in the public service, so as to insulate the employee against want and suffering after retirement. It is a kind right and benefits accruing to pensionable workers in the public service and subject to the employees conformity to public service rules and the pre-requisite standards for employment of pension and gratuity.

Gratuity

Gratuity is a lump sum of money given to an employee on retirement from the public service. It could as well be in form of kindness, housing, car or motor vehicle, cash or other monetary benefits. It holds to certain conditions for its payment. Gratuity is a deferred payment or fringe benefits to workers. It is also referred to as post-service welfare device which is motivational in nature. It is closely related to the employees contribution, rather paid to him/her for being a member and part of the public service. It is paid to enable the employee to settle down properly on retirement from active service.

Conditions For Payment Of Gratuity

To qualify for the receipt of gratuity in the public service, the officer is expected to meet certain stipulated conditions. These conditions are contained in the repealed Pension Act No. 102 (Cap 346) of 1979, the Reform Pension act 2004 and current circulars to that effect.

1. There must be clear evidence to show that the officer holds a permanent and pensionable appointment in the public service.

2. The officer must have served for a minimum period of five years.

3. The officer must have an up-to-date record of service, which must be forwarded to the office of Establishment and Management service in the Month of January, Preceding the retirement.

4. There must be evidence of completion of pension form, attached with the certificate of service to be forwarded to the Pensions Department of the Establishment and Management Service Office at least three months before the due date for retirement.

5. Any form of indebtedness to the government must be settled or the appropriate authorities notified.

6. There should not be any record of dismissal from the service, on the grounds of official misconduct or otherwise. For the ultimate penalty for dismissalm is the forfeiture of all claims to retirement benefits.

7. The retirement must be specifically approved and gazzetted.

Computation Of Gratuity/Pension

The computation of an officer’s gratuity/pension in the public service is based on the annual emoluments and period of service years in the public service. The gratuity service years, and the percentage of gratuity and pensions are contained in the pension handbooks, the relevant pension reform acts and the circulars from the office of Establishment and Management Services.

Pension

This is a periodic payment made by the employer to the retired employees, in consideration for his/her past services in the organization. This is a fringe benefit extended to a retired officer, to enable him/her maintain and enjoy his/her life, as to the level prior to his retirement. It is the thirty percent of annual terminal salary, paid on monthly basi. It is a measure of compensation paid by the employer in appreciation of the productive life of the retired officer while in the establishment. It is paid from the retirement date until the death of the retired officer. There are two types of pension. Namely, contributory and non-contributory pension. It is determined by certain conditions, which are affected by the age, period of service and conditions of appointment and retirement.

Conditions For Payment Of Pensions

1. The officer must have been appointed into service on pensionable basis.

2. He/she must have put a minimum of fifteen years in the public service, and also attain the age of forty-five years. This is for those who may contemplate voluntary retirement from the public service. But, on attainment of the statutory sixty years of age or thirty-years of service in the public service, the individual is retired and qualified for the receipt of pension benefits.

3. Therr should be certified record of service, which must not indicate dismissal on ground of misconduct or otherwise.

Non-Contributory Pension Scheme

This is a condition where the employer takes sole responsibility of the pension scheme. It is determined by the condition of service and nature of job. The worker contributes nothing to the scheme, rather enjoys the scheme as a compensation for his/her service rendered to the establishment in the past.

Contributory Pension Scheme

This involves a condition where the worker wouldhave some money or part of his/her salary put aside for his/her retirement. This is done as he/she receives his/her monthly salaries, and when they retire, they will have what they had contributed, what the employer contributed and the accrued interestt. This measure vests great control of pension funds in the hands of the pensioner. It is essentially reliable, tranparent and predictable.

It create opportunity for the self employed to participate. It is also an effort to systematically terminate pain and poverty on those who had given their life to public service. It additionally attempts to eliminate the humiliating and embarrasing conditions of the public servants on retirement.

The stock of funds so built under the scheme, could be available for long term development in agriculture, small and medium scale industrial establishments, manufacturing, information technology etc.

Contract Addition And Gratuity

This is an additional payment made to an officer on contract appointment in the public service. It is an incremental payment to a contractee whose appointment is without a break in service or his contract is re-engaged. It is payable wither annually or on monthly basis. And based and calculated on the ten percentage of the amount granted in the terms of the contract.

Contract Gratuity

It is a severance pay or compensation granted to a contract officer, on completion of the contract service. This is based on satisfactory service and the provisions of the contract agreement.

Severance

This is a lumpsum amount granted to a public officer who served the government in different capacities, but are not on pensionable appointments. The public officers entitled to this payment include, political appointees, legislators, directors and members of the Boards of Public corporations etc. The amount is calculated and given on the recommendations of the salaries and wahes commission as compensation for their service to the government.

Pension Reforms And Administration

The present civilian administration extended its reform programmes to the administration of pensions in the public service. The reform holds an overall objectives of re-organizing the pension schemes and the various institutions charged with the administration of pension in Nigeria. The reform overhauled the entire machinery of the pension system thrugh a holistic redefinition of its essence, as a mechanism of participatory savings for the proverbial rainy day.

In the days of yore, a public sectr employee is content to lie back twisting that at the point of exit from service, a fat severance cheque awaited collection somewhere, perhaps at the cash office. Today, the reality is that with the reforms, things have fundamentally changed.

National Pension Commission

It is a supervisory body established by the Present governmentunder the Pensions Reform Acts 200f, for the administration of Pension Scheme in Nigeria. It is a new frame fro dealing with future pensions demands, in the form of the fully funded contributory pensions scheme in place. The commission strives to cleanse the augean stable of pension related corruption that afflicted public service. It is an effort to deal tith the problem that succeeding governments failed to handle decisively.

The commission holds the responsibility to comprehensivelu verify the status of the Nation’s Pensioners and Administrators. It creates a credible database of verified pensioner and to provide a more transparent, accountable and auditable system of paying pensioners.

Summary

The pensions and gratuity in the public service are determined by the relevant conditions of service, and further dictated by the nature and characteristics of the job. They are frings benefits and motivational, to encourage the public officers while in service, and further connect him/her with the establishment on retirement. The establishment remembers his/her services, and attempts through pension and gratuity to assist him/her maintain a meaningful life before death.

However, the present reforms in the pension scheme, with the relevant institutions and laws for the admininstration of pensions, have given new hopes and direction to public officers in their aspiration and contemplation of retirement.

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