93,803 Retire Without Benefits on Delayed Pension Protection Fund

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Ebere Nwoji
Despite promises made by the National Pension Commission(PenCom) on the establishment of Minimum Pension Guarantee Fund and the Pension Protection Fund as enshrined in the Pension Reform Act 2014, to ensure that Nigerian workers get retirement benefit at the end of their working years, a report by the Commission has revealed that about 93,803 private sector workers retired without benefits.

These category of workers were faced with this ugly situation because their Retirement Savings Accounts (RSAs) balances were N550,000 or below and considered insufficient to procure a programmed withdrawal or annuity.
This was despite assurance by PenCom to establish the Pension Protection Fund to augment the savings of contributors whose contributions fall below N500,000.

The commission disclosed this in its fourth quarter 2018 report. The pension industry regulator stated that in the fourth quarter of 2018, it granted approval for the payment of N845.36 million to 3,572 retirees, which comprised 188 public (federal and state) and 3,384 private sector retirees.

PenCom noted that during the period, 103,016 retirees received en-bloc payments totalling N25.80 billion from inception to the end of the fourth quarter of 2018, which was considered insufficient to procure a programmed withdrawal or annuity. According to PenCom, 93,803 private sector workers have so far retired without pension benefits, while public sector workers were 9,213.

Aside the fact that establishment of the minimum pension guarantee fund and pension protection funds were enshrined in the 2014 Pension Reform Act, shortly after the enactment of the 2014 Act, the commission, had said it would establish the fund for the benefits of retirees registered with any of the PFAs.

According to PenCom under the leadership of its former Director General Chinelo Anohu-Amazu, the fund was to be used to guarantee the minimum monthly pension stipends that retirees would be getting, just the way workers in both the public and private sectors were enjoying the minimum wage.

According to the commission, part of the funds for the minimum guaranteed pension would be obtained through an annual subvention of one per cent of the total monthly wage bill payable to employees in the public service of the federation.
The commission had further assured that the fund would also be funded from the annual pension protection levy paid by PenCom and all licensed pension operators at a rate it would determine from time to time.

The commission had further said the pension protection fund would also be funded from income realised from the investment of the contributed fund and that it would utilise the pension protection fund for the minimum guaranteed pension for all Retirement Savings Account holders who had done business with a licenced Pension Fund Administrator for a minimum number of years to be specified by the commission.

PenCom had further said the fund would be used for the payment of compensation to eligible pensioners during period of financial losses arising from investment activities.

Going by the way the scheme was structured, PenCom is to make regulations to govern the operations of the pension protection fund, its management and custody and set eligibility criteria as well as related matters.

Industry operators said the fund was supposed to work in tandem with the minimum pension guarantee, but not to enhance every contributor’s savings.
But THISDAY enquiries from industry operators showed that federal government was partly to be blamed due to the inadequate funding of PenCom.