When you think about retirement as a worker in Nigeria, you know it is an inevitable phase of life — you can’t escape it. Therefore, it is necessary to plan ahead for retirement or else you might end up feeling regretful. And your planning must involve getting the right information. For this, we’re here to help you.
If you are planning to retire someday, you must know the three types of retirement that exist.
We will shed more light on each type of retirement to help you understand what you need to do when you are about to close the chapter of active work, so keep reading.
Before we explain these types of retirement, you should learn why retirement planning is necessary for you.
Why is retirement planning necessary?
Retirement is, first of all, the part of your life when you get to rest from having worked in your youth to build a career and a life. It is an inescapable part of life; everyone, no matter how hardworking or successful, must and will retire. It might not be at the same time but it will happen.
Therefore, failing to plan for retirement is like leaving your house to go out without shutting the door and windows. It could rain and anyone can enter to do whatever they like: you might return and won’t like what you see — that’s exactly what happens when you leave retirement planning to chance. You should not gamble with it at all; it’s a valid part of your life that must be given adequate attention so that you can enjoy your old age.
Now, here are the three types of retirement in Nigeria:
3 types of retirement in Nigeria
Compulsory retirement
Compulsory retirement refers to leaving a job because your employer ended your contract as soon as you hit the compulsory age of retirement set by law or by the employer. This compulsory age of retirement differs from sector to sector as well as the job position.
For federal civil servants, the compulsory age is 65 years. Employers also have the right to establish compulsory retirement age policies for their workers, which are often specified in an employee handbook or contract.
Retirement benefits, such as pension payments, severance pay, or other benefits, are usually given to employees according to the terms and conditions of their employment contract and applicable law.
Voluntary retirement
This refers to an employee deciding to retire before reaching the compulsory age of retirement, commonly for reasons of one's own health, family, or finances. There are no legal requirements for retirement, so the timing is up to the worker.
Some Nigerian businesses try to reduce their workforce and save money by offering early retirement incentives to their employees. Severance pay, pension benefits, and other incentives are sometimes included in packages like these to entice workers to retire voluntarily.
Medical Retirement
In Nigeria, workers whose health makes it impossible for them to continue working are eligible for medical retirement.
Depending on the nature of the employee's employment, the employer or the government may provide this type of retirement.
It is common practice for an employer or the government to provide a pension or other retirement benefits to a worker who has been granted medical retirement. Pension or benefit amounts are determined by a number of variables, such as the employee's years of service, current salary, and the specifics of their employment agreement.
What you need to know
Whether or not you plan to retire compulsorily or voluntarily, it is important to start first by opening a Retirement Savings Account (RSA) where your monthly contributions can be saved to give you a comfortable life when you retire. To register, call the Marketing Manager at 09087448661 or send an email to info@oakpensions.com.