Retirement Planning: Securing Employees’ Confidence to Overcome Worries of Retirement


The attainment of the desired goal in retirement is enhanced through efficient and effective planning, continuous and sustained education, and acquisition of post-retirement skills. This article is an exposition of the fears of retirement engulfing the minds of Nigerian employees. It presents the Government’s effort to support retirement planning, retirement planning issues, and how to plan for retirement in Nigeria.


Retirement echoes like a good word but it is soaked with worries and frustrations for employees that have not prepared for it. Retirement symbolizes different things to many people. To some, it can be a delightful thing to look forward to, while to some it means the end of the road. In the view of Flippo quoted in Agulanna (2003) “with a society built on a work ethic, the move from a recognizable productive work role on one day to a role-less role the next day has stimulated the belief that retirement gives rise to mental and physical disorder and, at times, untimely demise; to many, work is life and idleness is a living death”.

Retirement requires adequate planning for financial needs ahead of time to maintain the desired lifestyle in retirement. Even though, saving for retirement is certainly a guessing exercise because the life expectancy formula is a product of human inclination. Nobody has an idea of how long he will live or how healthy he will stay, which means no one knows just how much to save for retirement. This makes it almost impossible to plan for retirement because wonderful retirement depends on lifestyle, expenditure pattern, a country’s economic situation, responsibilities, and target retirement age.

Life has been understood as an interval between birth and death. So, no time is too early or too late to start retirement planning, and contribution towards retirement should start as soon as one begins to earn money. This provides one more time to contribute, grow, and build the retirement savings account with pleasure and less pressure. Retirees are often afraid of running out of money than death. This is because even those retiring at age 60 or 65 may still live an additional 20 years on an average.

Generally, retirement poses two main challenges to the worker. First, a worker enjoys an interpersonal relationship with fellow workers while the service period subsists. Therefore, the occurrence of the retirement period becomes antithesis for such a worker to detach from the familiar environment and relationship. This deep fear of physical and emotional detachments usually drives employees into engaging in acts both legal and illegal. The legal act may include an application for extension of service period through contract employment and the illegal act may involve falsification of age and service records. Besides, the fear is more felt because there is no programme launch to receive retirees back into the society such as social safety net with which to aid the resettlement and rehabilitation of the teeming retirees in the country. Retirement thrives more under a well-managed, coordinated, and conducive internal and external environment.

Government’s Effort to Support Retirement Planning in Nigeria

In sustaining the employees’ confidence at retirement, the government initiated a Contributory Pension Scheme (CPS) which is the statutorily mandated retirement plan under the Pensions Reform Act (PRA) 2014. Every employee in an organization with three (3) or more staff must open and maintain a personal RSA in their names. In most organizations, the finance or accounting department facilitates the process of creating the RSA through a preferred Pension Fund Administrator (PFA). Monthly deductions and remittances of 10% and 8% of total monthly emolument, are contributed by the employer and employee respectively into the Retirement Savings Account (RSA). The objective is to ensure that upon retirement, or loss of employment, employees under the scheme would have access to some income through the various pension options. Funds under the scheme are invested on behalf of the contributors, in various investment schemes to ensure superior returns on investment for all contributors. The RSA can be accessed once the employee attains the age of 50. However, an employee who retires, disengages, or (under certain conditions) is disengaged from employment before attaining 50 years and is unable to secure other employment within four (4) months, may with the approval of the National Pension Commission (PenCom/the Commission) make a withdrawal not exceeding 25% of the total amount in the RSA.

What is more, Maslow’s theory of needs hierarchy identified shelter as one of the basic needs of man and to pursue the satisfaction of this need, the National Housing Fund (NHF) was established by the NHF Act of 1992 to mobilize funds that will facilitate the provision of affordable housing for Nigerians. Under the extant NHF law, every Nigerian earning N3,000 or more per annum is required to contribute 2.5 percent of their monthly basic salary to the NHF. The funds mobilized will be made available to contributors at affordable interest rates to build homes. And recently, the Federal Government as part of its monetization policy for its employees has begun the process of selling its houses to the employee as an owner-occupier basis.

Retirement Planning Issues in Nigeria

Most employees in Nigeria are living on low income and savings in the presence of undetachable huge family and social responsibilities. This is because Nigeria does not have a social security system that takes care of the aged, the young, unemployed, and most disturbing, the disabled, meaning that all these categories of people constitute an additional responsibility on the workers’ resources.  This prompted Ogunbameru, (2013) to assert that “many Nigerian workers have a belief that their pension would provide all that will be needed to live on comfortably in retirement”. In consonance with this, some workers are the apostles of false expectation- they live for a moment believing that the future will take care of itself. Nothing can be achieved without adequate planning. Most workers do not even have the idea of retirement planning, this could be adduced to the nonchalant attitude of employers towards providing pre-retirement programmes for their employees or lack of exposure to pre-retirement education. The most worrying issue is the practice by some workers to raise many children beyond their financial capacity, thereby leading to poverty. Poverty makes it difficult to budget and save money while raising children.

Undoubtedly, the delay in payment of retirement income has fetched unexpected suffering, anger, and demise to many retirees, which makes retirement a word to be dreaded by workers. The situation is so distressing that people who are still working and more so who are about to retire are getting dejected. Retirees may have a wonderful retirement plan but when the needed resources to execute the plan are not readily available at the required time, the heart-endearing plan will be buried with sorrows.

Nigeria still does not have a functioning mortgage system,

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