Retirement can be defined as a time when an employee reaches the end of his working life. The most important factor in retirement is the time factor. So time dependent is retirement. It is that governments pre-determine the span of a working life for employees.
The span of working life covers the time a man enters work until the age of 65 years and for a woman until the age of 60 years. In Nigeria the time limit is non-gender discriminatory. It is rather profession discriminatory. Judges and University Lecturers are exempted from the 65 years compulsory retirement age. This statutory retirement age is mandated by law that men and women should retire at the age of 65 years or 35 years in service.
Types of Retirement
There are two main types of retirement:
Mandatory Retirement Age: In the light of the life expectancy ofmodern times the mandatory retirement age is 65 years
Many organizational managers have maintained that compulsory retirement at a fixed age for all is beneficial.
The following are the reasons given:
– It is simple to administer with no implications to prove that the older employee no longer meets the job requirements.
– Openings are created to which younger employees can advance.
– Human Resources planning are facilitated when retirement schedules are known.
– Graceful exits are provided for employees who are no longer qualified in as much as the firm will wait out the final few years of declining productivity.
– It stimulates employees to make plans for retirement in advance of a known date.
Arguments against a fixed and compulsory retirement age are also plausible and rife. The main one is that it deprives individuals of a right to choose and fails to realize that individuals vary in talents. Also in terms of productivity energy and creativity, people age at different rates. According to Flippo forced retirements would result in insignificant losses of real talents.
Perhaps the answer to the question of retirement tied to age is to treat each case on its own merit. Here some people can retire at the sixty (60) while others can still make a valuable contribution beyond the age of seventy (70). This seems to be in line in respect to academic staff in Nigerian Universities who were required to retire at the age of sixty-five (65) but the new thinking is that each University is to decide when academics of the rank of Associate Professor and above are to retire. The yardstick for retirement in case is now to be productivity rather than chronology.
The implication of how retirement age is that rather than retire at an advanced age into idleness despondency and usually early death, today’s retired peoples corps is vibrant, healthy and agile group that go in for other jobs and are virtually collecting double salary, i.e. Pension and the new salary.
Voluntary retirement is when a staff who is not up to the 65 years mandatory retirement age wishes to disengaged from the service. In Nigeria an employee under the pensionable service has an option to retire voluntarily at any age from 45 years to 60 years. But at the age of 60 years or 35 years in service however, he has to retire mandatorily.
Pension and Gratuity
Contributory and Non-contributory Pensions
In some organizations employees are made to contribute to their pension scheme. However even when they are not ostensibly made to contribute. It is not unconceivable that they do contribute. Even under the so-called non-contributory systems, although the employing agency presumably bears the entire burden, it may in part be borne by employees through longer salaries. The contributory pension scheme has the following advantages:
– It is easier to establish because the burden is divided.
– It checks extravagant demands on the part of the employees since it is clear that a part of the cost would be borne by themselves.
The employee accepts a joint responsibility to fund a scheme which plans for the depletion of his faculty in the interest of the organization as well as themselves
In organization where there exists a qualifying period for the enjoyment of a pension, a contributory scheme gives the employee his own portion of the contribution even if he has not attained the qualifying year. What this entails is that there is no period of departure of the employee which sends him out empty-handed.
Some organizations stipulate the number of years an employee is expected to have served before he is entitled to a pension or gratuity.
This is most common under the non-contributory schemes. In Nigeria you qualify for pension after 15 years of Service and gratuity is 10 years though it has further been reduced to 10 and 5 years in recent times. The implications of this action is that it now facilitates earlier departure from the service. But on the contrary, if the service or any particularly organization desires to keep his employees longer in its employment, it could do so by increasing the qualifying period for pensions and gratuities for its staff.
Source National Open University of Nigeria