ICANBusiness, Management and FinanceManagement Theories and Functions2021

Aisha Bello, CEO of Kaduna Textile Mills Limited, is reviewing operational costs. The company employs 200 workers at an average monthly wage of ₦85,000 each. The company pays 10% employer Pension Fund contribution as required by the Pension Reform Act 2014. What is the total monthly staff cost (wages plus employer pension contribution) borne by the company?

A₦17,000,000
B₦18,700,000CORRECT
C₦16,150,000
D₦19,500,000
AI
Toaster Teacher
Why the answer is B, and why the others tempt you.
Total monthly wages = 200 workers × ₦85,000 = ₦17,000,000. Employer pension contribution = 10% × ₦17,000,000 = ₦1,700,000. Total monthly staff cost = ₦17,000,000 + ₦1,700,000 = ₦18,700,000. The Pension Reform Act 2014 mandates a minimum employer contribution of 10% of monthly emoluments to the Retirement Savings Account of each employee.
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