The
success of the Contributory Pension Scheme (CPS) following enactment of
the Pension Reform Act in 2004 as amended in 2014 is based on the
unreserved commitment
of the Federal Government towards compliance and remittance.
Achievements of the scheme, which has been recognized within and outside
the country, cannot be taken away from the good example government
showed from inception. This also did not only encourage
private sector participation and compliance, but also helped to build
confidence in the pension system, to the extent that the Nigerian worker
is happy and hopeful of a pensionable retirement.
But
what has happened in the past one year, when the Federal Government
failed to meet its obligation of funding the Retirement Benefits Bonds
Redemption Fund
(RBBRF) for public sector retirees. This is about to rob the system of
the success it has achieved over the past years. It is also about to
create a bad precedence, undermine confidence and encourage bad practice
by private sector employers who looks to government
for good example.
Current
figures reveal that Federal Government has not remitted pensions in the
last 11 months beginning September 2015, so making it difficult for
Pension Fund
Administrators (PFAs) to commence payment of pension benefits to
affected public sector retirees that left employment within that period.
This
is further worsened with the appropriation of a N50 billion in the 2016
budget for payment of Federal Government Employees’ retirement accrued
benefits, against
N91 billion required to fund the scheme, indicating a N41 billion short
fall according to calculations by the industry.
“The
shortfall in the appropriation bill, would mean government compounding
the sufferings of more retirees who would be unable to access their
retirement benefits,
says a market analysts who is worried by the situation.
Olufemi
Sobanjo, adviser on pension matters said Government must as a matter of
urgency device means to pay up pension accrued rights so that the
current pension
scheme is not dragged into disrepute.
“What
this county cannot afford to do is to destroy the current pension
arrangement, the CPS (Contributory Pension Scheme), because we have had a
terrible bad
experience with government managing pensions.
Eguarekhide
Longe, chairman, Pension Fund Operators Association of Nigeria (PenOp)
said compliance with regard to remittances of pension contributions from
the
Public Sector on both the Federal and State levels have lagged notably.
“While
remittances from the Federal Government through the National Pension
Commission (PenCom) were last received since September 2015, some states
have outstanding
remittances dating back over two years.”
Longe
expressed regrets that some of retirees had not been able to access
their pension even at presentation of bonds issued to them by
government. “This is so
because there aren’t enough resources from the Federal Government to
meet the obligation.”
The
affected retirees are Federal Government employees who had four years
or more to retire at the Commencement of the Contributory Pension Scheme
(CPS), but had
been part of the old pension scheme Defined Benefit Scheme (DBS).
Pension
Reform Law mandates the federal government to set aside a percentage of
its total monthly wage into a retirement savings bond account so that
upon the
retirement of the affected individuals this bond will be redeemed and
then paid.
Section
15(1) (a) (b) of PRA 2014 states that the transfer entitlement (the
accrued rights to retirement benefit) for any non-exempted public
service employees
who had been under any unfunded DB pension scheme existing before the
commencement of PRA 2004, shall be recognized in the form of a bond to
be known as Federal Government or Federal Capital Territory Retirement
Benefits Bonds (RBB) issued by Debt Management
Office (DMO).
The
Director General of PenCom, Chinelo Anohu-Amazu had informed that at
the beginning of the reform there was cut-off date and those who had
three or less number
of years to go didn’t have to join the scheme, while those who had four
or more years to go, joined the new scheme. “Already, they were mid way
into their career and so had some rights due them. So the law says,
those right are to be computed as though they
had retired in 2004 and then converted as bond to be redeemed at the
time of their retirement.”
This
is the issue, and the PFA’s saddled with managing RSA under the CPS are
unable to pay because the payment schedule says they will need to add
both the accrued
rights and the contributions together so that there will be agreement on
whether it is for lump sum, programmed withdrawal or it’s for annuity.
It will have to be a totality of what is due you; otherwise, it will not
be a realistic payment.”
The
Pension Fund Operators Association of Nigeria (PenOp) recently said the
CPS has been working perfectly, but the delayed accrued rights payment
by government
is dragging the shadow of the old scheme into the new scheme, making it
look ineffective.
According
to the Pension Reform Act 2014,the objective of the CPS among others is
to ensure that every person who worked in either the Public Service of
the Federation,
Federal Capital Territory, States and Local Governments or the Private
Sector receives his retirement benefits as and when due. Apart from
that, it is also to assist improvident individuals by ensuring that they
save in order to cater for their livelihood during
old age.
Culled from Businessdayonline.com
No comments:
Post a Comment