As poverty in Nigeria bites harder, making it almost impossible for the naira to buy basic necessities, pension industry stakeholders are considering an upwards review of retirement lump-sum to meet contributors’ expectations.
This, expected to come in the next pension law amendment, will help contributors and retirees meet their immediate and medium-term needs after leaving paid employment, and also reduce agitation pressures on the industry.
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Section 7 (1) (a) of the Pension Reform Act (PRA) 2014 allows for 25 percent lump sum to be paid to a retiree provided that the amount left after the lump sum withdrawal will be sufficient to fund a programmed withdrawal or annuity over the expected lifespan.
But at the 3rd Annual Pension Fund Operators Association of Nigeria (PenOp) and the National Assembly Joint Committees For Establishment And Public Service Of The Senate And House Of Representatives Committee On Pensions held last weekend in Lagos with the theme: ‘17 Years of Pension Reforms: Gains, Challenges and Opportunities,’ stakeholders agreed that to ensure for adequacy, and end increasing agitation by contributors, it had become necessary to review the lump sum.
In a communiqué issued at the end of the meeting, the stakeholders agreed that “there was a consensus that the lump-sum amount should be reviewed to address issues of adequacy and address contributors’ agitations.”
The meeting noted that the industry had continued to record impressive growth across key performance indicators since the Pension Reforms of 2004.
“The pension industry in addition to being beneficial to contributors has played pivotal role in driving economic growth and development in Nigeria, while the scheme has recorded several giant strides in its 17 years of operations, there are still so many issues that need to be addressed in order for the pension industry to create more value for all stakeholders,” according to the communiqué.
It also acknowledged the role the National Assembly, Labour Unions and Pension Fund Operators have played in the survival of the Contributory Pension Scheme through supportive legislations, buy-in and adherence to best practices, respectively.
But also, it noted that the industry faces some major challenges, some of which are – low coverage and compliance, inadequacy of benefits and poor awareness about the benefits of the pension scheme.
The meeting resolved that huge public enlightenment was required to drive compliance among state governments to expose them to the benefits of embracing the CPS and also educate them on how to leverage pension assets to facilitate infrastructural development.
The meeting resolved that the National Assembly should set up a task force to engage state governments and come up with innovative ways to help drive compliance by state governments.
“The meeting also resolved that a satisfaction survey should be commissioned by PenOp but handled by a third party to gauge the level of satisfaction with the scheme.
“That pension operators should also take the issue of documentation seriously in order to ensure that pensioners are not made to go through unnecessary stress in order to access their benefit; that considering the role legislation plays in driving national development, the National Assembly and PenOp should continue to collaborate in order to create legislations that will facilitate acceleration of pension assets growth and improved access to contributors,” the communiqué noted.
Finally, the meeting applauded President Muhammadu Buhari for approving the release of accrued rights and backlog of the differential based on the 10 percent employer contributions according to the PRA 2014.
