Introduction
1.1 General Background To The Subject Matter
The work that one does gives status to the person. It also gives a meaning to life and feeling of contribution to general welfare. Work also permits a person to be active, energetic and to have constructive social interaction with others. Inspite of the face that work brings fulfillment, one must retire from active service for one cannot deny the fact that as workers grow older, they make many adjustments and tend to develop gradually into a social group that is separate from the younger worker. Increasing physical and mental limitation associated with advancing age, make it difficult for such people to work safely and competently thereby maintaining previous levels of performance. At the stage of retirement, the worker’s output reaches diminishing returns. It becomes necessary for the worker to stop working if his employer wants to minimize loss although not everyone would welcome the idea of retirement even with a generous pension.
Retirement as defined by J. A Donnelly et al (1992 : 326), is the changes in job situation whereby the individual gives up his job when diminishing returns set in. Eze (2001 : 15) explained retirement as the stage where the employer is dissatisfied by the job performance of the employee.
The German Chancellor, Otto Von Bismarck in the 1880’s started the concept of retirement. His public pension plan supported a retirement age of sixty-five years. Insurance companies began to use that retirement age in planning retirement and annuity programmes. Though the retirement age vary in countries and organizations, Nigeria operates one of the most generous pension schemes in the world. After ten years of service, an employee qualifies for pension. An employee could then retire and enjoy the rest of his active life. Result of Nigerian pension scheme is that the public service is seen as being more lucrative in terms of a persons work life.
At the period of retirement, it is important that the future life of the worker be considered by planning for his welfare. This means to pay a consideration that will help the worker to go on with life. Several reasons have been given for the need for such compensation. Prominent among the reasons is to provide economic security for the employee at retirement. Secondly, it guarantees the willingness of the younger generation to work and also see the organization as a good place to work in.
The compensation paid to the worker at retirement is known as pension. It is a contractual payment between the employer and the employee.
…
