1. What is Pension?

Pension is a regular income received by a person at retirement when he/she stopped working because of having reached a certain age or based on health condition in order to cater for his/her needs at old age.

 

2. What is Micro Pension Plan?

Micro Pension Plan refers to an arrangement under the Contributory Pension Scheme (CPS) that allows the self-employed and persons working in organisations with less than three (3) employees to make financial contributions towards the provision of pension at their retirement or incapacitation.

 

3. Why Micro Pension?

Micro Pension guarantees secured future through steady income at retirement. It reduces old age poverty and the process is easy, simple and flexible.

 

4. Has the Micro Pension Plan been successful in other countries?

Yes, Micro Pension Plan has been successful in countries like Ghana, Kenya and India.

 

5. Is the mandatory Contributory Pension Scheme different from the Micro Pension Plan?

The mandatory pension and Micro Pension Plan are arrangements under the Contributory Pension Scheme (CPS). The only difference between the two is the nature of participation. Thus, the mandatory pension is obligatory for all eligible employees and both the employer/employee contribute towards the payment of the employee’s pension at retirement. Micro Pension on the other hand is voluntary and solely funded by the contributor.

By World Finance

 

WITH pension contributions expected to rise globally, a number of nations have developed models to reward their workforce for life after retirement

As the retirement age and life expectancy continues to rise around the world, having a sustainable pension scheme is more important than ever

Thanks to gradually rising life expectancy and a higher state pension age, pension contributions are set to soar around the world. World Finance explores the top five countries with sustainable pension systems, where retirees can live particularly well with their pension pot.

Thanks to rising life expectancy and a higher state pension age, pension contributions are set to soar

Australia

Australia’s three-tier ‘superannuation’ pension system is one of the most touted in the world. It includes a tax-financed age pension, providing basic benefits, a company pension pot and the individual contribution to a retirement savings account. Employers are required to contribute 9.5 per cent of worker’s gross earnings, which totalled AUD2.3trn ($1.8tn) at the end of 2017.

 

Canada

Canada provides its workforce – especially low-income citizens – with the Canada Pension Plan, which is a universal flat-rate pension plus a supplement based on income. Voluntary pension plans were also recently introduced, and from 2019 until 2025, workplace contributions will increase by one percent to 5.95 percent.

 

Denmark

The average Danish pension pot is well funded due to its ‘folkepension’ – a universal pension scheme ensuring that pensioners receive a basic retirement income. One notable result of Denmark’s successful system is that, according to an OECD 2017 report, its private pension assets represented 209 percent of Denmark’s GDP in 2016.

Read Also: Impact of pension funds on financial services sector

Germany

Germany’s pay-as-you-earn state pension makes up its main retirement system, which provides a safety net for low-income earners. Occupational pensions are not compulsory but approximately 60 percent of all German workers participate – a number that is expected to grow in the coming years.

 

Switzerland

Ranked sixth in the world in 2017 by Mercer’s Global Pension Index, Switzerland’s public pension primarily depends on workers’ earnings. Conversely, the compulsory organisational pension depends on a worker’s age – meaning that with age comes a larger contribution. Swiss insurers and various banking foundations have also put voluntary schemes in place.

 

COURTESY:  World Finance

By Omobola Tolu-Kusimo

 

TOTAL of 10,673 workers, who lost their jobs, were paid N5.28 billion pension in the second quarter (Q2) of the year, The Nation has learnt.

According to the National Pension Commission (NAICOM), the money represents 25 per cent of the balances of their Retirement Savings Account (RSA) as prescribed by the Pension Reform Act 2014.

The Commission in its Second Quarter 2019 Summary Report stated that the workers, who are RSA holders under the Contributory Pension Scheme (CPS), and under  50, were disengaged from work and unable to secure another job within four months.

The Commission said  the RSA holders who were paid benefits for the temporary loss of job was 324,141.

These RSA holders were paid  N113,21 billion, being 25 per cent of the balances of their RSAs as prescribed by the Pension Reform Act 2014.

A further analysis showed that the private sector accounted for 95.33 per cent of those who benefited from these payments while the public sector accounted for 4.67 per cent.

The Commission approved the payment of N4.69 billion as death benefits to the beneficiaries of the 1,223 deceased employees during the quarter under review, which brought the number of deceased employees from both the public and private sectors to 57,043. The cash paid during the quarter moved the total payments of death benefits to N178.56 billion.

Read Also: NAICOM okays new directors for Standard Alliance Insurance

The Commission also approved the payment of the entire RSA balances of the retirees whose RSA balances were N550,000 or below and considered insufficient to procure a Programmed Withdrawal or Annuity of a reasonable amount over an expected life span.

Similarly, approval was granted for payment of RSA balances to foreign nationals who decided to return to their home countries after making contributions under the CPS.

Accordingly, N665.38 million was paid to 2,801 retirees, which comprised 173 from the public sector retirees (F ed Govt and state) and 2,628 from the private sector retirees.

Also, 109,284 retirees received en-bloc payments totalling N27.09 billion from inception to the end of the second quarter of last year.

The pension industry grew significantly between 2018 and 2019 in accumulation and investment of pension fund assets. However it has not met the aspirations of contributors and retirees under the Contributory Pension Scheme (CPS), especially Federal Government retirees who no longer receive their pension as and when due. Omobola Tolu-Kusimo reports.

 

The Nigerian pension industry began the year with no substantive head at the helms of affairs of the regulatory authority, the National Pension Commission (PenCom) since 2017.

In spite of this, the Acting Director-General, Mrs. Aisha Dahir-Umar, in her capacity drove regulations and pushed policies of the Commission beyond low budget and ensured regulation and supervision of the Pension Reform Act (PRA) 2004, as repealed by PRA 2014 did not suffer.

The Commission continued to take a stand against contraventions like poor corporate governance, delay in the payment of retirement benefits among others. Stiffer penalties were enforced among the operators against contraventions of the Act.

Mrs. Dahir-Umar completed work on micro pension plan which was started by the Commission’s former Director-General, Mrs. Chinelo Anohu-Amazu in 2015.

Micro pension plan refers to an arrangement under the Contributory Pension Scheme (CPS) that allows the self-employed and persons working in organisations with less than three employees to make financial contributions towards the provision of pension at their retirement or incapacitation.

The Acting DG ensured the launch of the much awaited scheme in March 2019 with President Muhammadu Buhari cutting the tape and declaring it open to capture and cover the over 70 million participants in the informal sector. Since then, about 30,000 persons working in the sector have been captured under the scheme.

Work is also in progress by the Commission to actualise the mandate of Transfer Window that will enable contributors and retirees under the scheme to move their pension account from one Pension Fund Administrator (PFA) to another, in the event the account holders are dissatisfied with services rendered by a PFA. The Commission has given up to June 2020 to open the transfer window.

The pension fund assets under the Contributory Pension Scheme (CPS) has however continued to grow. The fund has grown from a deficit of N2 trillion before the commencement of the Pension Reform Act in 2004 to N9.8 trillion in October 2019. The assets has grown by over 100 per cent in one year going by the N8.4 trillion recorded in October 2018.

But a major setback for the Commission is the nonpayment of pension to retirees of the Federal Government as and when due that has been the practice since 2015.

Presently, retirees who retired from December last year till date have not been paid their pension. This is as a result  of nonpayment of accrued rights into Retirement Savings Accounts (RSA) account of employees by the Federal Government.

In the same vein, some private sector employers fail to remit their employees’ contributions to their RSA account as stipulated by the PRA 2014.

Another setback for the Commission is the non-compliance and adequate enforcement on the mandatory 18 per cent monthly pension contribution rate for workers.

Both the government and private sector employers are in breach of the law as they still remit based on the old rate of 15 per cent. Besides, many do not remit the 15 per cent to their workers RSA account.

This has led to agitations by workers, retirees and stakeholders asking that the President, Muhammadu Buhari should priotise pension.

Stakeholders have called on the President to pay more attention to the pension industry and alleviate the suffering of retirees.

They claim that the country is gradually regressing to the old pension system as pensions are no longer paid as and when due.

Besides, they have asked the President to as a matter of urgency appoint a Board and substantive DG for PenCom.

Lending their voice to the call that the President do what is right for retirees and others under the Scheme are legislators in the country.

Revealing that Federal Government’s total pension liabilities to Federal Government retirees under the CPS is N400 billion, Former Governor of Kano State and Chairman, Senate Committee on Establishment and Public Service, Senator Ibrahim Shekarau condemned the accumulation of debts from accrued rights by the Federal Government against its workers.

He stated that the two chambers of the National Assembly will invite the Minister of Finance, the Accountant General of the Federation and the Secretary to the Government who is in charge of retirees under the scheme to explain to them why retirees are not paid.

He promised to escalate the issues surrounding accrued pension rights and other issue causing delayed pension to President Buhari and ensure an end is put to debts owed retirees.

The former Director-General of PenCom and Chairman, Polaris Bank, Mr Mohammed Ahmad also condemned the nonpayment of pension as and when due in recent times.

In his view, the President Buhari need to prioritise the payment of accrued rights of retirees.

He said: “Although the government had been religiously paying the monthly pension contributions based on the old rates, it has not been able to meet up with the adequate and regular payment of accrued rights.

“This is causing untold hardship and pain to many who have been waiting for years for their retirement savings account to be funded appropriately.

This is non negotiable and we should constantly bring this up at every opportunity until these accrued rights are funded by the government.

“While PenCom has been statutorily empowered by the PRA 2014 to direct the Accountant General of Federation to deduct at source unpaid accrued pension rights, this power had never been exercised because of political constraints.

The continued success of the pension industry will largely be hinged on the ability of employers to honour their obligations as and when due. In the recent past,  members of the National Assembly had assisted in getting the government to accelerate the payment of the arrears of accrued pension rights.

It would appear another tier of unpaid obligations have been built and the industry would once again require the collective efforts of all stakeholders for the timely payment of the accrued rights.”

Mrs Dahir-Umar on her part, stated that the CPS had, in the last 15 years, made appreciable progress in addressing most of the shortfalls of the erstwhile pension system.

Read Also: Pension backlog ‘to be paid’

 

She disclosed that as at September 30, 2019, the pension industry membership had grown to 8.85 million participants, while the pension fund assets under management were valued at N9.58 trillion and deployed in critical sectors of the economy.

“The number of retirees under the CPS as at September 30, 2019 amounted to 298,614. Out of that number, 227,400 retirees are on programmed withdrawal and 71,214 opted for annuity. In the same vein, death benefits had been paid to 59,057 beneficiaries.

These statistics are clear evidence that the CPS has greatly improved access to retirement benefits for employees in both the public (Federal and State Governments) and private sectors.

“The CPS is, however, not without its challenges, the primary ones being inadequate funding of the Retirement Bond Redemption Fund (for payment of accrued rights of retiring Federal Government employees) and agitations by some agencies of government to pull out of the CPS.

Other challenges are operational, arising from implementation hiccups. It is in this regard that this Retreat is very important for the pension industry.

“The National Assembly, especially the Committee on Establishment and Public Service of the Senate and House of Representatives Committee on Pensions, are key stakeholders in shaping the direction of the pension industry and keeping the momentum of the reform in the sector; while making sure that the interests of Nigerians participating in the scheme are protected”, she added.

Pension complaints

 

TOR: My complaint is on non-payment of outstanding pension and gratuity sum of N1,723,275.33. I am a retired officer with the Nigeria Immigration Services. I was in service at the time of introduction of National Pension Commission (PenCom) in 2004.

By 2006, I registered with First Alliance Pension Limited in the first instance which has now metamorphosed into ARM Pension Managers with a PIN 100####.

But certificate issuance was unusually delayed and no explanation was advanced. This unexplained delay created anxiety prompting me to register with another pension manager, Stanbic IBTC Pension with PIN PEN100####. I retired in May, 2016.

By December 29, 2016, I applied for harmonisation of my pension managers to the PenCom into one pension manager to facilitate payment of my pension. PenCom replied me in a letter of February 1, 2017.

In the said reply, PenCom recognised the first pin registered with ARM as a valid PIN and that Stanbic IBTC PIN is considered invalid.

That ARM Pension Managers PFA Limited would retain the first valid pin on its data base while Stanbic IBTC Pension Managers would de-activate the second invalid Pin from its data base.

PENCOM advised that I should maintain Retirement Saving Account pin with ARM pension for all pension transactions.

PENCOM also promised to reconcile the contributions in the valid Pin to ensure that total contributions there in are brought up to date accordingly, while that in the valid PIN (if any) would be refunded to the Federal Government through its accounts with the Central Bank of Nigeria. Kindly assist me solve this problem.

PENCOM: His retirement benefits were paid into the second pin with Stanbic IBTC. He is advised to formally write the complaint to the Commission for proper treatment.

Read Also: Pension complaints and solutions

 

JOHN:  My name is John, a retiree from Federal Polytecnic Idah 2018. My PFA is Sigma. I did my biodata in July 17, 2017 and my last salary was September 2018. I learnt that PenCom exists for the Nigerian pension industry to ensure that retirement benefits are paid as and when due.  Since the time to date does it mean pension is no longer paid as and when due? When should I expect my retirement benefits. And, what are the kind of problem(s) that cause this long delay?

PENCOM: He needs to forward his enrolment slip to enable the Commission access his records.

FOLOWOSELE:My name is Folowosele, I retired as a civil servant. Please what document do I submit to PENCOM to process my pension.

PENCOM: He needs to contact the Pension Desk Officer (PDO) of his MDA to get the necessary documents for enrolment. He is also required to come along with the PDO to the enrolment center for his/her attestation.

ASUQUO: I am Asuquo from Akwa Ibom. Please what are the rules and regulations of payment for Federal Government retirees? Secondly, I retired in April this year when will my accrued right be paid.

PENCOM: The rules and regulation for payment of Federal Government retirement benefits under the CPS starts by participating in the Commission’s Pre-retirement verification and enrolment exercise. The prospective retiree/retiree needs to contact the Pension Desk Officer (PDO) of his/her MDA to get the necessary documents for enrolment. He/she is also required to come along with the PDO to the enrolment centre for his/her attestation. After the enrolment exercise, the retirement benefits are determined and paid into the RSA of the retiree based on the information provided by the retiree during enrolment. But please NOTE that retirement benefits are paid subject to release of funds by Federal Government for payment of accrued rights.