• Tuesday, July 23, 2024
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FG retirees access pensions on release of N40bn bond


Federal Government retirees who left employment between February and September 2015 can now access their retirement benefits from their Pension Fund Administrators (PFAs), following government’s release of an estimated N40 billion into the ‘Retirement Benefits Bond Redemption Fund’ covering about eight months, BusinessDay learnt last night.

This closes a hole of over N48 billion that was created in government’s pension purse from September 2014 to September 2015 when government failed to redeem its bond, which affected payment of benefits to retirees who left employment within that period.Statistics from the industry show that N483.33 billion has been released into the Retirement Benefits Bonds Redemption Fund Account by the FGN, which was invested by the Central Bank of Nigeria and yielded N7.71 billion between 2006 and March 2015.

For September to December 2015, total mandate was put at N20.08 billion, while the total accrued benefits for the period was N23.12 billion- meaning that average monthly mandate stands at about N5.2billion.

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 employee who had been under any unfunded defined benefits pension scheme existing before the commencement of PRA 2004,shall be recognised in the form of a bond to be known as Federal Government or Federal CapitalTerritory Retirement Benefits Bonds (RBB) issued by the  Debt Management Office (DMO).

A chief executive of one of the PFA’s who confirmed the payment by government said, I am reliably informed that government has paid up to September 2015. That’s a good development; at least the backlog has been reduced, though we still have about four months left.

The Pension Fund Operators Association of Nigeria (PenOp) said the Contributory Pension Scheme (CPS) works 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 PenOp, without the rights, operators cannot aggregate the retirement savings account balance and calculate retirees’ lump sum and programmed withdrawal, thereby leaving them without pensions.

ChineloAnohu-Amazu, director-general, National Pension Commission (PenCom) had said that retirees being owed were simply those who had a history of pension entitlements from the public sector, being their accrued right from the Defined Benefit Scheme (DBS). “It is not the PFAs that don’t have money to pay. I think I have to make this clear, she said.”

Anohu-Amazu further said that at the beginning of the reform, there was a cut-off date and those who had three or less 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 careers and so, had some rights due them. So the law says, those rights 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.”

She said the law also mandated 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.

According to her, this has been going on until the past year, “when there was a clear shortage in the funds because a lot of the country’s budget is dependent on the oil revenue, and the slump in oil revenue is affecting everybody across nations.This is the first time there has been a difficulty in meeting this accrued benefit.

“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.”

Modestus Anaesoronye