ABUJA, NOVEMBER 10, 2016 – Retirees under the Contributory Pension Scheme will from early next year enjoy a minimum pension payment irrespective of the balance in their Retirement Savings Accounts.
The Chairman, Pension Fund Operators Association of Nigeria, Mr. Eguarekhide Longe, disclosed this to our correspondent in an interview.
“The minimum pension is going to take up early next year. We (operators) are supposed to pay three per cent of our management fees to set up the fund, the National Pension Commission is supposed to pay another fee and they have already given us a notice that we must ensure that we put that money in our budget in 2017 and that it will take up next year,” he said.
Last year, operators of the scheme proposed a minimum stipend of N14,400 for each retiree in the draft guideline on the commencement of the minimum pension for retirees under the CPS.
Longe, however, did not confirm if the minimum pension would remain the same amount.
He noted that pension operators had a responsibility to make their own contribution to the fund to kick-start the payment of the minimum stipends, while the Federal Government would also have to pay its own contribution.
“Pension operators will put forward the information of the people who are not earning up to the minimum pension stipend and they can now get the augmented amount from the pension protection fund, that is how it works,” he said.
The Pension Reform Act, 2014 provided that PenCom should establish and maintain a fund to be known as the Pension Protection Fund in respect of the guaranteed minimum pension.
According to the Act, funding of the minimum guaranteed pension will be partly obtained from an annual subvention of one per cent of the total monthly wage bill payable to employees in the public service of the federation and returns from pension fund investments.
It will also be funded from the annual pension protection levy paid by PenCom and all licensed pension operators at a rate to be determined by the commission from time to time.
The draft guideline, which has been sent to PenCom by the operators, states that only workers who have contributed a minimum of 15 years into their Retirement Savings Accounts will enjoy the minimum pension.
It added that the informal sector and casual workers must have contributed to their RSAs for 120 and 135 months, respectively before they could enjoy this privilege.
The initiative, according to the operators, will bring an end to the situation where retirees are paid abysmally low pensions or paid nothing when the balances in their RSAs are very small.
Presently, the CPS and the old defined benefit pension scheme are in existence in the country.
Pensioners under the defined benefit scheme have also been agitating for the payment of a guaranteed minimum pension.
Recently, the Nigeria Union of Pensioners proposed a minimum pension of N25,000 for retirees under the old defined scheme, but the Federal Government has yet to respond to the proposal.
The National President, NUP, Dr. Abel Afolayan, stated, “It needs to be pointed out that many pensioners under the defined benefits scheme receive less than N10,000 per month. This can never be regarded as a minimum or living pension.
“With the present economic situation in the country, no pensioner should be paid less than N25,000.”