A total of 152, 972 retirees under the Contributory Pension Scheme (CPS) since inception in 2004 will not be able to secure any retirement plan for monthly or quarterly income at old age.
The affected retirees were being shut out of this benefit due to the accumulation of a substantial amount in their Retirement Savings account (RSA) to enable them to procure a Programmed Withdrawal or Life Annuity plan for retirement, as provided in the Pension Reform Act 2014.
They have also been paid enbloc sum totalling N43.31 billion since inception, data from the National Pension Commission (PenCom) has revealed.
According to the Commission, the affected retirees’ RSA balances could not provide monthly pensions, currently put as – at least one-third of the prevailing minimum wage, being N30,000.00 monthly.
Therefore, since the inception of the CPS in 2004 to June 2023, 156,426 have applied for enbloc payments, while 152,927 were approved; and 3, 499 were rejected.
The Commission’s data shows that out of the figure, retires from federal government agencies, ministries and parastatals accounted for 7,681; states 4, 245 whereas the private sector accounted for the highest with 141, 001.
PenCom data in the second quarter 2023 shows that the commission received 3,570 requests from retirees for enbloc payments during the period.
Out of that, 3,555 retirees’ requests were approved, as their RSA balances could not provide a monthly pension of at least one-third of the prevailing minimum wage, being N30, 000.00. At the same time, 15 were rejected because of incorrect Annual Total Emolument (ATE).
“Out of the 3,555 retirees whose benefits were approved, 3,416 were from the private sector, while the remaining 139 were from the public sector.
Read also Pension asset hits N17.29 trillion
“The sum of N2.05 million was approved for the 3,555 retirees, the commission said.
While Pension Fund Operators would not stop any retiree who did not qualify for monthly pensions from applying for enbloc payment, they said, “we are not happy that some RSA holders could not quality to benefit from the objectives of establishing the scheme, which is to ensure that anybody who works in either the public or private sector and retires earns his pension as and when due”.
We encourage employees to embark on voluntary contributions to augment what they have contributed mandatorily, Pension Fund operators said.”
Oguche Agudah, chief executive officer, Pension Fund Operators Association of Nigeria (PenOp), who applauded success of the CPS in helping workers enjoy a healthy and guaranteed retirement income, said it is important that people take control of their plans and make informed decision on how they want it to be.
He said voluntary contributions will enable you build retirement fund that can enable you make choices of the kind of benefits you would want to enjoy at time in retirement.
While speaking recently on accessing fund for mortgage, he said to qualify and to have the desired choice; contributors would have to voluntarily save into their RSA.
Oguche said people should take control of their pensions, ask questions and make certain decisions that will enable them enjoy the benefits, and make sure it is working as expected.
Experts at ARM Pensions said Voluntary Contributions are extra funds you can opt to add to your mandatory pension contributions, or simply set aside as retirement savings.
These funds would be deducted from your monthly emolument by your employer and remitted into your RSA, along with your regular pension contributions.
They said VC differs from other regular savings you may have, as it is deducted from your salary before tax. This is a significant advantage of the VC, as the contributions have tax incentives and could lower your overall tax liability.
An additional advantage, and a major difference from regular pension contributions, is that you are at liberty to decide the amount you wish to contribute, in addition to the frequency of the contributions; e.g. monthly, quarterly, bi-annually or annually.
