In most industries, employee pensions went out with the stand-alone fax machine and three-button suit, but in government, pension plans are still common.
Government retirement systems provide a healthy complement to Social Security and personal investments. These three elements make up the three-legged stool of government retirement.
Government Employee Pension Plans
As in all government expenditures, taxpayers ultimately foot the bill, but they are not the only ones with “skin in the game.” Retirement annuities aren’t just given to public employees when they stop showing up for work. Employees contribute a portion of each paycheck to their retirement systems, which much later down the road entitles them to annuity payments.
When individuals take public service jobs, part of the decision to accept a job offer is whether the person can live off the salary minus the retirement contribution. The tradeoff is the employee does not have to save as much for retirement from the remaining salary dollars. Also, the investment is entirely or partially handled by the retirement system.
Government Agencies Contribute
Government agencies also contribute to employee pension plans. Many agencies are required to match (or nearly match) the amount of money that employees contribute. Agencies see this as a personnel cost similar to other employer-paid benefits like health insurance premiums and life insurance.
A somewhat analogous private sector cost is an employer match to an employee’s 401(k) contributions. These contributions are invested to fund annuity payments and grow monetary reserves.
Source: The Balance Careers
The Nigerian Government Pensions
In 2004, the Federal Government of Nigeria enacted the Pensions Reform Act (PRA 2004) which introduced the Contributory Pension Scheme (CPS) and made it mandatory for employers and employees in both the public and private sectors to contribute towards the retirement benefits of employees.
In 2014, the PRA 2004 was repealed and a new act PRA 2014 was signed into law. This new act has now made it mandatory for state and local governments to implement contributory pension schemes for their employees
