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Nigerian workers whose Retirement Savings Account (RSA) balance stands at N550, 000.00 or below at retirement, as well as expatriates who worked in Nigeria and have returned to their home countries have taken away N22.07 billion from pension funds since take off of the Contributory Pension Scheme(CPS).
CPS is a fall out of the Pension Reform Act 2004 as amended in 2014, which mandates employers of labour to open a Retirement Savings Accounts (RSA) for their employees and jointly make contributions for purposes of pensions.
This represent the total amount approved as lump sum to retiring workers whose contributions were not enough to take up monthly pensions either through programmed withdrawal or annuity, as well as expatriate staff who contributed through voluntary contributions and have left the county.
During the fourth Quarter of 2017, the National Pension Commission (PenCom) approved the payment of N1.81 billion to 3,403 RSA holders comprising 321 public workers and 3,082 private sectors retirees.
Cumulatively, 89,844 retirees under these categories received a total sum of N22.07 billion from inception to the end of the fourth quarter of 2017, PenCom.
“This includes RSA balances of the categories of retirees whose RSA balances were N550, 000 or below and considered insufficient to procure Programmed Withdrawal or an Annuity of a reasonable amount over an expected life span. And also foreign nationals who decided to return to their home countries after making voluntary contributions under the CPS,” the Commission said.
The PRA 2014 allows a lump sum payment of not less than 25 per cent of the RSA balance to a retiree, provided that the amount left after that lump sum withdrawal is sufficient to fund the programmed withdrawal over an expected life span or annuity for life. Retirees with balance less than N550, 000 are deemed to have insufficient funds and their money will be returned to them.
Guidelines for Cross Border Arrangements under the Pension Reform Act released by PenCom states that any foreign employee of a company registered in Nigeria shall, at his/her discretion, join the contributory pension scheme, without considering whether or not he/she has a pension arrangement in his/her home country.
“The employee shall inform his employer of his interest to join the Scheme and shall open an RSA with a Pension Fund Administrator (PFA) of his/her choice.
According to the guideline, in the event of permanent relocation of the individual, he/she shall give three months prior notice to the PFA before exiting from the scheme.
PenCom said these guidelines have been put in place for the purpose of establishing a standard set of rules and procedures for the Contributory Pension Scheme established in Nigeria for foreign nationals and Nigerians resident abroad to participate in the CPS.
It sets out to provide a platform to accommodate foreigners working in Nigeria in the new scheme, thus guaranteeing a better retirement life for them.”
Besides, it seek to encourage the participation of Nigerians abroad in the
CPS and assist them to save in Nigeria towards their old age and subsequent return.”
Ivor Takor, a legal practitioner and executive director, Centre For Pension Right Advocacy said the Minimum Guarantee Pension as provided for in Section 84 subsection 1 of PRA 2014 must be taken very seriously so that everyone who has contributed for a certain years will have pension in retirement .
He said the section provides that all RSA holders who have contributed to a licensed PFA for a number of years to be specified by the Commission shall be entitled to a guaranteed minimum pension as may be specified from time to time by the Commission.
Takor stated that for sustainability of the pension industry, there must be the political will on the part of the federal and states governments.
“There must be effective regulation and supervision of the industry by PenCom and compliance with the provisions of the PRA 2014 as well as regulations, rules and guidelines issued by PenCom from time to time by all stakeholders. This is what is required to sustain the reform of the pension industry,” Takor stated.
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