Pension

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The Pension Structure Of Nafdac

The National Agency for Food and Drug Administration and Control (NAFDAC) is a critical regulatory body in Nigeria tasked with ensuring the safety and quality of food, drugs, cosmetics, and other regulated products. As a government agency, NAFDAC operates under the purview of the Federal Government, which oversees its operations, including its pension structure. This article delves into the pension structure of NAFDAC, including the amount paid per level attained.

Overview of NAFDAC's Pension System

NAFDAC, like other Federal Government agencies, adheres to the pension system established under the Pension Reform Act of 2014. This Act introduced the Contributory Pension Scheme (CPS), replacing the Defined Benefit Scheme (DBS). Under the CPS, both the employer (the Federal Government) and the employee contribute a specified percentage of the employee’s monthly salary to a Retirement Savings Account (RSA) managed by a Pension Fund Administrator (PFA).

Key Features of the Contributory Pension Scheme

1. Mandatory Contributions: Employers contribute 10% of the employee’s basic salary, housing, and transport allowances, while employees contribute 8%. This makes a total contribution of 18% of the employee’s monthly emolument.

2. Retirement Savings Account (RSA): Employees have individual RSAs with their chosen PFA, where contributions are deposited.

3. Benefits on Retirement: Upon retirement, employees can access their pension savings as monthly withdrawals or a lump sum, depending on their preference and the balance in their RSA.

4. Gratuity Payments: In addition to the CPS, retirees may also receive gratuity payments based on their years of service and final salary grade level.

Salary Structure at NAFDAC

NAFDAC employees are placed on the Consolidated Research and Allied Institutions Salary Structure (CONRAISS), which determines their basic salary, allowances, and benefits. This salary structure directly impacts the pension contributions made during an employee’s career and the benefits they receive upon retirement.

Below is an outline of the salary grades and basic annual pay at NAFDAC:

• Level 1 (Entry Level): ~₦200,000 – ₦300,000

• Level 8: ~₦800,000 – ₦1,000,000

• Level 9: ~₦1,000,000 – ₦1,500,000

• Level 10: ~₦1,500,000 – ₦2,000,000

• Level 12: ~₦2,000,000 – ₦3,000,000

• Level 14: ~₦3,000,000 – ₦4,000,000

• Level 15 (Director Level): ~₦4,000,000 – ₦5,000,000

These figures are approximations and vary depending on specific roles, allowances, and years of service.

Pension Contributions by Grade Level

Based on the above salary structure, here is an estimate of the pension contributions per level:

1. Level 1 (Entry Level):

   • Basic Salary: ₦200,000 – ₦300,000

   • Monthly Contributions (18%): ₦3,000 – ₦4,500

   • Annual Contributions: ₦36,000 – ₧54,000

2. Level 8:

   • Basic Salary: ₦800,000 – ₦1,000,000

   • Monthly Contributions (18%): ₦12,000 – ₦15,000

   • Annual Contributions: ₧144,000 – ₧180,000

3. Level 9:

   • Basic Salary: ₦1,000,000 – ₦1,500,000

   • Monthly Contributions (18%): ₦15,000 – ₦22,500

   • Annual Contributions: ₧180,000 – ₧270,000

4. Level 10:

   • Basic Salary: ₦1,500,000 – ₦2,000,000

   • Monthly Contributions (18%): ₦22,500 – ₦30,000

   • Annual Contributions: ₧270,000 – ₧360,000

5. Level 12:

   • Basic Salary: ₦2,000,000 – ₦3,000,000

   • Monthly Contributions (18%): ₦30,000 – ₦45,000

   • Annual Contributions: ₧360,000 – ₧540,000

6. Level 14:

   • Basic Salary: ₦3,000,000 – ₦4,000,000

   • Monthly Contributions (18%): ₦45,000 – ₦60,000

   • Annual Contributions: ₧540,000 – ₧720,000

7. Level 15 (Director Level):

   • Basic Salary: ₦4,000,000 – ₦5,000,000

   • Monthly Contributions (18%): ₦60,000 – ₦75,000

   • Annual Contributions: ₧720,000 – ₧900,000

These contributions accumulate over the course of an employee’s career and form the basis of their retirement benefits.

Pension Benefits After Retirement

Upon retirement, NAFDAC employees receive pension benefits based on their RSA balance. Retirees have the option of choosing a programmed withdrawal or an annuity:

1. Programmed Withdrawal: Retirees receive monthly payments based on their RSA balance and life expectancy. Payments are recalculated annually.

2. Annuity: Retirees can purchase an annuity plan from a licensed insurance company, providing regular income for life.

Additionally, gratuity payments may be provided based on the employee’s final grade level and years of service. While gratuity payments are not standardized under the CPS, the Federal Government often implements additional benefits for retirees.

Sample Pension Calculations

Let’s consider a NAFDAC employee retiring at Level 12 with 30 years of service:

• Total Contributions: Assuming an average monthly contribution of ₦40,000 over 30 years:

  • Annual Contributions: ₧480,000

  • Total Contributions: ₧14,400,000

• Returns on Investment: Assuming a modest annual return of 5%:

  • Estimated Total Pension Savings: ~₧18,000,000

Retirement benefits would be drawn from this total balance, either as monthly payments or a lump sum.

Conclusion

The pension structure of NAFDAC is designed to ensure financial stability for its retirees. By adhering to the Contributory Pension Scheme, NAFDAC employees can build substantial retirement savings, supplemented by gratuity payments and other benefits. Understanding the pension system and the contributions per level helps employees plan effectively for their retirement, ensuring a comfortable post-service life.