Pension For Accountants In Civil Service

When we talk about civil service in Nigeria, one profession that plays a very key role but doesn’t always get the full spotlight is that of accountants. These are the people who handle government money, make sure public funds are properly managed, and ensure that government finances are not misused. But after dedicating 30 to 35 years of their life to the service of the country, what happens when they retire? How are they taken care of? Do they enjoy their retirement with peace of mind or do they face challenges collecting their pension? This blog post will break down the pension structure for civil service accountants in Nigeria, the system currently in place, the challenges they face, and what can be done to improve the situation.

Understanding the Pension System in Nigeria

Before we go deep into how it affects accountants specifically, let us first understand the general pension structure in Nigeria.

There are two major types of pension systems in Nigeria:

1. Defined Benefit Scheme (DBS) – This is the old system that used to operate before 2004. In this system, the government was solely responsible for paying pensions after retirement. The amount to be paid was usually calculated based on the worker's last salary and number of years in service. However, over time, this system became difficult to maintain because government budgets could not cover the increasing number of retirees.

2. Contributory Pension Scheme (CPS) – To address the issues in the old system, the Nigerian government introduced the Contributory Pension Scheme (CPS) through the Pension Reform Act of 2004. Under this new system, both the employer (government or private organisation) and the employee (civil servant) contribute monthly to a Retirement Savings Account (RSA) which is managed by Pension Fund Administrators (PFAs). This scheme was updated in 2014 and it is now the official pension scheme for all federal and many state civil servants in Nigeria.

How Much Is Contributed to Pension?

Under the CPS, the law states that the employer (in this case, the federal government or a state government) must contribute at least 10% of the employee's monthly salary, while the employee must contribute 8%, making a total of 18% monthly contributions into the Retirement Savings Account (RSA).

Let’s take an example:

• If an accountant in the civil service earns ₦150,000 per month,

  • The government will contribute ₦15,000 (10% of salary),

  • The accountant will contribute ₦12,000 (8% of salary),

  • Total monthly pension contribution = ₦27,000.

This money is not just kept somewhere doing nothing. It is managed and invested by PFAs to generate profit over time, so that by the time the person retires, the amount in the RSA has grown due to investment returns.

Salary Structure and Pension Breakdown for Civil Service Accountants

Civil servants in Nigeria earn based on what is known as the Consolidated Public Service Salary Structure (CONPSS). This structure is used to calculate both their salaries and pensions.

Below is a table showing different grade levels and estimated salary ranges, and the expected monthly pension contributions:

Note: These figures are estimated ranges and can vary depending on the state or federal establishment.

How Do Accountants Access Their Pension After Retirement?

Once an accountant retires from service, they don’t just collect all their pension money at once. There are structured ways through which they can access the money in their RSA:

1. Lump Sum Withdrawal: This is the amount the retiree can collect immediately after retirement. The amount is usually a percentage of the total balance in the RSA.

2. Programmed Withdrawal: After collecting the lump sum, the remaining money is paid monthly (or quarterly) by the PFA as pension. This is known as programmed withdrawal.

3. Annuity Plan: Some retirees prefer to collect their pension through an insurance company. In this case, they use part of their RSA balance to buy an annuity policy which will pay them monthly or quarterly for life.

Challenges Civil Service Accountants Face in Collecting Pension

Even though the CPS looks good on paper, in reality, many Nigerian accountants who retire from civil service face serious challenges when it comes to collecting their pension. Some of the common issues include:

1. Delay in Disbursement

Many retirees wait for several months or even more than a year before they receive their first pension payment. This delay can be frustrating, especially when the retiree has no other source of income. Some have to borrow money from family and friends just to survive.

2. Non-Remittance of Contributions

In some cases, government agencies fail to remit their own part of the contributions on time. This means that even though the civil servant was deducted every month, the full 18% contribution is not reflected in their RSA. This problem has affected many retirees and made it difficult for them to access their full pension.

3. Exclusion from Pension Increases

Under the old pension scheme (DBS), the federal government has approved pension increases over the years – like the 15% increase in 2007 and the 33% increase in 2010. However, those who retired under the CPS are not included in these adjustments, making their pension amounts stagnant despite rising inflation.

4. Lack of Proper Documentation

In some cases, retirees are unable to access their pensions due to incomplete or inaccurate documentation. This could be due to human error, misplacement of files, or failure to update records while in service.

5. Insufficient Investment Returns

While PFAs are expected to invest pension funds for growth, some complain that the returns on their RSA balances are too low. This affects the total amount available at retirement and leads to lower monthly pension payments.

How Can the System Be Improved?

To make sure Nigerian civil service accountants and other public workers enjoy the retirement they deserve, certain steps must be taken:

1. Strict Enforcement of Pension Laws

PenCom (the National Pension Commission) must ensure that all government agencies remit their contributions promptly. Defaulters should be penalised to prevent future recurrence.

2. Creation of a Pension Reserve Fund

The government should set up a special reserve fund to handle pension shortfalls. This fund can act as a backup to ensure retirees are paid even when government budgets are tight.

3. Equal Benefits for All Retirees

All retirees, whether under CPS or DBS, should benefit from general pension increases approved by the government. This will ensure fairness and improve the standard of living for all.

4. Digital Record Management

All staff records should be fully digitised to prevent loss or errors. This will also make pension processing faster and more transparent.

5. Increase Investment Opportunities

PFAs should be given more options to invest pension funds in high-yield, low-risk ventures. Better returns will mean higher RSA balances and better payouts after retirement.

Testimonies from Retired Accountants

Many retired accountants have shared their experiences with the Nigerian pension system. Some have expressed gratitude for the CPS structure, saying it allowed them to access a lump sum that helped them start a business. Others, however, lament the long wait and the frustration of dealing with PFAs and government bureaucracy.

Mrs. Angela, a retired level 14 accountant from Lagos State, said:

“My retirement was supposed to be sweet, but I spent almost a year before I received my pension. I had to depend on my children. I thank God today, but the system really needs improvement.”

Final Thoughts

Accountants in Nigeria’s civil service play a very important role in keeping the financial engine of government running. After decades of service, they deserve to retire with dignity and peace of mind. While the Contributory Pension Scheme is a step in the right direction, more work needs to be done to ensure it functions effectively for all. The welfare of our public workers, especially those managing the nation’s finances, must not be taken for granted.

Summary Table: Pension of Accountants in Civil Service (Nigeria)