State workers lose access to mortgage over pensions

Employees of states that are yet to comply with the Contributory Pension Scheme (CPS) will not be eligible for equity contributions for residential mortgage, as provided for in the Pension Reform Act 2014, BusinessDay investigations reveal.

This is coming as the industry regulator, the National Pension Commission (PenCom) prepares to issue final guidelines for equity contribution of residential mortgage from employees Retirement Savings Accounts (RSA).

The draft is already out, with stakeholders making their contributions.

Section 89 (2) of the Pension Reform Act (PRA) 2014 provides that a Pension Fund Administrator may, subject to guidelines issued by the National Pension Commission, apply a percentage of pension fund assets in the retirement savings account, towards payment of equity contribution for payment of residential mortgage by a holder of the Retirement Savings Account (RSA).

As at the end of the first quarter of this year, 26 state governments had enacted laws on the Contributory Pension Scheme (CPS) while the remaining 10 were at the Bills stage.

Apart from enacting a law on the CPS, eight of the 36 states of the federation had commenced remittance of contributions into the RSAs of their employees, while sic states have commenced the funding their Retirement Benefit Bond Redemption Fund Accounts (RBBRFAs).

Chinelo Anohu- Amazu, director-general, National Pension Commission (PenCom) said the states are at different stages of compliance, pointing out that everybody should join hands to encourage and compel the states to comply with the scheme for the benefit of their citizens.

“The beauty of this scheme is that we are relying on the employees to blow the whistle, unlike what we had before, when the employees did not have much rights on their pensions. We expect everybody, including the employees to request for compliance from their employers.

“What we have done, which is another directive from Mr President, is that we should work with the National Executive Council (NEC) to compel states to sign up with the scheme and open RSA’s for their employees. And if they receive bailout for workers salaries, that should also cover their pensions, because pension is a function of salaries,”Anohu- Amazu observed .

She however called on the media to support the commission in making the states key into the scheme, “what we are soliciting is for you gentlemen of the press to be the vanguard and champions in the struggle, by ensuring that every state takes care of its citizens by opening for them a Retirement Saving Accounts.

The commission, as part of strategies to increase the level of compliance and awareness about the scheme, had facilitated and organised sensitisation workshops on CPS for key stakeholders in different parts of the country, including in Minna, Niger State in the first quarter of 2015.

The participants were drawn from across the Ministries Departments and Agencies of Niger State and its Local Governments, as well as the State Pension Board, the commission said.

Misbahu Yola, chairman, Pension Fund Operators Association of Nigeria (PenOp) said the focus of the industry now is on how to get the states to comply with the scheme because there are a lot of benefits including mortgage for employees, as well as access for bonds by state governments.

“Whether I am in this industry tomorrow or not, this is the best pension scheme anybody could imagine, because it guarantees comfort and rest of mind for both employers and employees.

“We will continue to encourage the states to key into the scheme for the benefit of their employees, Yola who is also the managing director, Legacy Pensions Limited, said.

Modestus Anaesoronye