The non-implementation of the Minimum Pension Guarantee (MPG), one of the pension protection policies that came with the 2014 Pension Reform Act, has shut out 2,801 retirees from having pensions in retirement.
The MPG was meant to ensure support for eligible retirees by augmenting the balance in their Retirement Savings Accounts (RSAs) to enable them qualify for a reasonable monthly pension payment.
But according to figures released by the National Pension Commission (PenCom) for the second quarter of 2019, the retirees were paid off en-block because the balance in their RSA was not sufficient to provide them pension in retirement, as provided in the law.
PenCom in the report stated that the Commission granted approval for the payment of the entire RSA balances of these categories of retirees whose RSA balances were N550,000 or below and considered insufficient to procure a Programmed Withdrawal or Annuity of a reasonable amount over an expected lifespan.
Accordingly, the sum of N665.38 million was paid to 2,801 retirees, including foreigners leaving Nigeria, which comprised 173 from the public sector retirees (Federal and State) and 2,628 from the private sector.
This brings the number of retirees that have so far received en-block payments to 109,284, having collected payments totalling N27.09 billion from inception to the end of the second quarter of 2019.
Pius Apere, managing director/CEO, Anchor Actuarial Services Limited, said the implementation of the MPG would create excitement and build contributor confidence, whether in the formal or informal sector.
He noted that the regulation for protection fund needs to be simple with less documentation, stating that adequate periodic reviews and monitoring the effective implementation of the MPG would be required.
“The implementation of GMP will also help to bring confidence in the Contributory Pension Scheme (CPS),” Apere said.
Misbahu Yola, managing director/CEO, FCMB Pensions Limited, had said at the inclusion of the MPG in the Act that the creation of the Pension Protection Fund (PPF) and MPG was a welcome development for all stakeholders in the pension industry and would give more security to low level contributors.
He also noted that funding the scheme would require political will and commitment, stating that it would foster greater confidence in pension administration and attract more participation.
To fund the MPF and MPG, there was to be an annual subvention of one percent of the total monthly wage bill payable to employees in the Public Service of the Federation that was to be set aside by FG, but this has yet to take off.
Besides that, there was also to be a levy paid by the Commission and all licensed pension operators at a rate to be determined by the Commission from time to time, as provided in section 84 of the PRA 2014 to fund the protection policies, but these have yet to become effective.
The objective of the pension scheme is to ensure that every person who worked in either the public service of the federation, Federal Capital Territory, states and local government or the private sector receives his retirement benefits as and when due.
It is also to assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age.
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