The millennial and the Contributory pension schemes- Odunze Reginald C

Image credited to independent.co.uk

Who are the Millennial, according to Millennial Legacy, “Millennial are the generation born between 1982 and sometime in the early 2000’s. However, these boundaries aren’t set in stone. Some definitions have the Millennial Generation starting as early as 1978 and starting as late as 1985. Basically, if you are born a little earlier than 1982 and you consider yourself to be more Millennial than Generation X, that is your opinion. Or if you were born in or just after 1982 and you feel that you are more Gen X than a Millennial, the same applies. It is really up to the individuals born during the cusp years (late 1970’s to early-mid 1980’s) to decide which generation they feel a stronger connection to”

Continuing it stated that “The digital generation is providing some hope for the retirement crisis. After watching their parents suffer through two major financial bubbles and the weakest economic recovery on record, the majority of millennial are placing money aside for retirement — as long as they have a job.”

It has been argued the contribution pension scheme is the main thing as most countries around the globe are migrating from the Defined Benefit Scheme to the Defined contributory scheme.

For contributors retiring within the next 10 years, they will not understand the beauty of the scheme, but for the fresh graduate of 25 years who may be expected to be in the scheme for the next 35 years, either to retire at the age of 60 or 35 years of service. They will understand better.

By simple calculation, the first batch of millennial are expected to access their retirement benefit between the period 2039 and 2042. And the real millennials are expected to access their retirement benefit between 2050 and 2060. Will it be enough? Will it match the value of the bond of their predecessors?  This therefore calls for an individual’s calculation of the estimated pension pot based on your expected date of retirement.

In a recent forum in Lagos, the AGM , public sector, National Pension Commission,  Mr. Mamman  noted that those that are entering the service at this time will be more favored than those already in the service , this is in agreement with my earlier postulations titled “ Will the Millennial  be entitled to bond” which appeared in Reginald odunze.com, in the article Odunze noted that the Millennial will be better than the present contributors based on the contributory pension scheme.

A rough estimate of the schemes indicates that even with a contribution of (Ten Thousand Naira) 10,000.00 with a zero retirement savings balance, making an annual savings of 120,000 on 9 percent interest rate with 3 percent inflation rate with life expectancy of 87 will have = N=26,936,446.54 while with 30000 monthly with the same parameters will give =N=80,809,339.61 with a monthly pension of =N=236,387.60. That’s a whole lot of money bearing in mind that the industry average is almost 13 percent.

From the analysis above which I used the pension calculator to calculate, it all means that the Millennial are more favored with contributory  pension scheme than the defined benefit scheme.