Govt approves N34bn payout for retirees
PRESIDENT
Goodluck Jonathan has finally approved the release of N34 billion to
offset the outstanding accrued rights of retirees and death benefits of
deceased employees of Federal Government, under the Contributory Pension
Scheme (CPS).
Specifically, the beneficiaries of the fund, according to a release from the National Pension Commission (PenCom), signed by its spokesman, Emeka Onuora, include retired employees that enrolled with the commission, “including next of kins of deceased employees that have documented with the Pension Fund Administrators…but who have not been paid their entitlements”.
The President’s approval was sequel to the recommendation of the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, on the submission made by Pencom to the government on the status of the account and the identified huge deficit.
The Federal Government, under the CPS, has been setting aside five per cent of its total monthly wage bill into the retirement bond redemption account with the Central Bank of Nigeria, for the settlement of the accrued pension rights of its employees since the commencement of the pension scheme, as required by the Pension Reform Act, 2004.
However, the account has been overstretched in recent years with the upsurge of retirements from the Federal Civil Service, occasioned by the tenure policy, voluntary retirements and thousands of unredeemed death benefit claims, resulting into heavy back log of arrears that could not be accommodated due to paucity of funds in the account, giving rise to untold hardship to retirees and next of kins of deceased pensioners.
The Pension Reform Act 2004 is the most recent legislation of the Federal Government aimed at addressing the associated problems of the old pension system.
It established the CPS, which is a uniform pension system for both the public and private sectors.
Similarly, for the first time in the history of the country, PenCom was established to regulate and supervise all pension matters in the country.
The scheme is being managed by licensed Pension Fund Administrators (PFAs), while the custody of the pension fund assets are provided by licensed Pension Fund Custodians (PFCs).
The law that established the CPS mandated all workers in the public service of the federation, Federal Capital Territory and the private sector where the total number of employees is five or more to join the contributory scheme.
However, existing pensioners and workers that had three years or less to retire in accordance with the terms of their contract of employment were exempted from the scheme. Also exempted were the categories of persons under Section 291 of the 1999 Constitution of the Federal Republic of Nigeria.
Under this scheme, public sector workers contribute a minimum of 7.5 per cent of their monthly emoluments but the military personnel contribute 2.5 per cent.
The public sector contributes 7.5 per cent on behalf its workers and 12.5 per cent in the case of the military.
Employers and employees in the private sector contribute a minimum of 7.5 per cent each.
An employer may elect to contribute on -behalf of the employees such that the total contribution shall not be less than 15 per cent of the monthly emolument of the employees.
An employer is obliged to deduct and remit contributions to a custodian within seven days from the day the employee is paid his salary, while the custodian shall notify the PFA within 24 hours of the receipt of such contribution. Contribution and retirement benefits are tax-exempt.
Specifically, the beneficiaries of the fund, according to a release from the National Pension Commission (PenCom), signed by its spokesman, Emeka Onuora, include retired employees that enrolled with the commission, “including next of kins of deceased employees that have documented with the Pension Fund Administrators…but who have not been paid their entitlements”.
The President’s approval was sequel to the recommendation of the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, on the submission made by Pencom to the government on the status of the account and the identified huge deficit.
The Federal Government, under the CPS, has been setting aside five per cent of its total monthly wage bill into the retirement bond redemption account with the Central Bank of Nigeria, for the settlement of the accrued pension rights of its employees since the commencement of the pension scheme, as required by the Pension Reform Act, 2004.
However, the account has been overstretched in recent years with the upsurge of retirements from the Federal Civil Service, occasioned by the tenure policy, voluntary retirements and thousands of unredeemed death benefit claims, resulting into heavy back log of arrears that could not be accommodated due to paucity of funds in the account, giving rise to untold hardship to retirees and next of kins of deceased pensioners.
The Pension Reform Act 2004 is the most recent legislation of the Federal Government aimed at addressing the associated problems of the old pension system.
It established the CPS, which is a uniform pension system for both the public and private sectors.
Similarly, for the first time in the history of the country, PenCom was established to regulate and supervise all pension matters in the country.
The scheme is being managed by licensed Pension Fund Administrators (PFAs), while the custody of the pension fund assets are provided by licensed Pension Fund Custodians (PFCs).
The law that established the CPS mandated all workers in the public service of the federation, Federal Capital Territory and the private sector where the total number of employees is five or more to join the contributory scheme.
However, existing pensioners and workers that had three years or less to retire in accordance with the terms of their contract of employment were exempted from the scheme. Also exempted were the categories of persons under Section 291 of the 1999 Constitution of the Federal Republic of Nigeria.
Under this scheme, public sector workers contribute a minimum of 7.5 per cent of their monthly emoluments but the military personnel contribute 2.5 per cent.
The public sector contributes 7.5 per cent on behalf its workers and 12.5 per cent in the case of the military.
Employers and employees in the private sector contribute a minimum of 7.5 per cent each.
An employer may elect to contribute on -behalf of the employees such that the total contribution shall not be less than 15 per cent of the monthly emolument of the employees.
An employer is obliged to deduct and remit contributions to a custodian within seven days from the day the employee is paid his salary, while the custodian shall notify the PFA within 24 hours of the receipt of such contribution. Contribution and retirement benefits are tax-exempt.
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