The Nation Newspaper

Category: Pension

  • Chicago pension measures in doubt as Quinn withholds signature

    Chicago pension measures in doubt as Quinn withholds signature

    It’s decision time in Chicago, the moment to rescue sinking pensions that could pull the city under. And nothing is happening, Bloomberg reports.
    Two weeks after Illinois lawmakers approved a bill to help stabilise two of the city’s four municipal retirement systems, Governor Pat Quinn hasn’t said whether he’ll sign it. City Council members, a year from re-election campaigns, are balking at delivering their part of the deal — a $750 million property-tax increase.
    A recovery effort championed by Mayor Rahm Emanuel, who in 2011 succeeded 22-year incumbent Richard M. Daley, is imperiled as almost $20 billion in unfunded pension promises burden the nation’s third-most-populous city. Chicago’s credit rating has been cut four times since July to three steps above junk.
    “The issue is ‘Whose ox is going to be gored?’” said former alderman Dick Simpson. “It’s a huge hit.”
    Retirement-fund pressure is bearing down on cities across the nation, including bankrupt Detroit and Stockton, California. Chicago has the highest pension costs as a proportion of revenue — 17 per cent — among the largest cities, according to a November report from the Center for Retirement Research at Boston College.

    Considered decision

    “The cost of paying for this is hitting a lot of cities,” said Norton Francis, senior research associate at the Urban-Brookings Tax Policy Center in Washington. “They are surrounded by suburbs, and you don’t want people to move out.”
    Chicago lost seven per cent of its population in the past decade. Among major US cities, none save bankrupt Detroit lost more people. Emanuel’s proposal to raise property taxes during the next five years to help funds for laborers and other workers reverses the 54-year-old Democrat’s earlier opposition to such a measure and underscores the severity of the crisis.

  • Lagos SUBEB, local govt retirees receive N1.7b pension 

    Lagos SUBEB, local govt retirees receive N1.7b pension 

    Employees ,who retired in Lagos State, have continued to receive their pension as at when due following the state’s commencement of the new Contributory Pension Scheme (CPS) in April 2007. Last week, 437 retirees from the State’s Universal Basic Education Board (SUBEB) and the local government areas, received over N1.7 billion Retirement Bond Certificate. Some of the retirees recount their experiences to Omobola Tolu-Kusimo.

    Four hundred and thirty-seven Lagos State retirees, many of whom are drawn from the State Universal Basic Education Board (SUBEB) and the local government areas, smiled home last week after recieving over N1.7 billion pension from the state.

    The amount is an accumulation of their accrued rights for past service to the state prior to the commencement of the new pension scheme, the Contributory Pension Scheme (CPS) in April 2007.

    Their pension was, however, presented in bond certificates which they will present to the various Pension Fund Administrators (PFAs), who will in turn credit their bank accounts.

    Before now, the state government paid a total accrued right of N22.7 billion to 4,199 retirees from inception of the CPS.

    Besides, the National Pension commission (PenCom) has continued to use state as an example, as it is the only state in the country that has fully complied with the Pension Reform Act 2004, followed by Niger State.

    Director-General, Lagos State Pension Commission (LASPEC) Mr. Rotimi Hussain, who spoke at the first tranche of the 11th Retirement Bond Certificate Presentation to retirees of the state Public Service, said apart from presenting bond certificates, the event was set aside to celebrate the commitment of workers in the state during their service years.

    He said this was a follow-up to the 10th batch held in February this year, adding that it is a confirmation of Governor Babatunde Raji Fashola’s commitment (SAN) to make life worthy and remarkable for all its employees in retirement.

    He said: “Of great importance is the fact that the N17.2 billion has already been domiciled in the respective Retirement Savings Account (RSA) of each of the 437 retirees in addition to their 7.5 per cent monthly contributions and another 7.5 per cent counterpart contribution by the government.

    “It is a thing of joy to confirm that with the presentation ceremony we are witnessing today, Lagos State has tremendously grown its stake in the administration of the CPS in Nigeria having so far paid N24.4 to 4,636 retirees from the public service from inception of the Scheme till date”.

    He urged the retirees to be cautious and careful about the type of business they embark upon after retirement.

    He told them to be sure they are conversant and have a fair knowledge of the business they want to embark upon, so as to avoid falling into the hands of fraudsters.

    He said LASPEC has put the retirees through all they needed to know about the workings of the scheme during the pre-retirement seminars, and it is their fervent belief that they are now in the best position to put the knowledge acquired to use in all their future endeavours.

    He said they are however at liberty to meet their (PFAs) and Insurance firms for further guidance on the procedures and processes of accessing their retirement benefits immediately after the ceremony.

     

    Retirees’ report

     

    The pensioners however gave an account of their service years and retirement under the new scheme as well as how they intend to spend their pension.

    Mrs  Bisi Oluomu, who retired as a teacher from District C, Oshodi Isolo in 2012 after 32 years of service, said she is excited that she is alive to receive her pension although it came in this year.

    She said: “I had to go through all the process required of a retiree under the CPS. I also want to appreciate my husband and my relation for their support since I left service.

    “I am happy to retire today and my advice to workers is that they should prepare ahead for retirement. They should know that it is just like death that would come one day. You just have to prepare a little bit ahead and that’s what I have done. This will help you to be prepared for retirement without fear.”

    When asked if she would choose Programme Withdrawal or Life Annuity for pension payment, she said she believes the Progamme Withdrawal is better, noting that she will consult professionals for advice before she finally makes her choice.

    On the CPS, she said: “I am just collecting the money now and we just received a lecture.

    “I like the new pension system because it does not require the stressful process of the old scheme where you are made to queue under the sun and rain with some people collapsing in the queue. Under this new Scheme, I know where to go and queue. Your PFA would make sure your money is paid in the bank. In Lagos state they even gave us names of PFA and insurance companies that they trust to choose from.”

    Mrs. Julie Aigbe said she joined the Lagos State public service as a teacher in 1979 and retired as the principal of Lafiaji High School in 2012 after serving for 31 years.

    She said: “I am grateful to God for a day like this. After retirement we need to sit back and enjoy the fruit of our labour. Some of us have not handled large sums of money before, so we need to handle it very well so we don’t go bankrupt.

    “I retired two years ago at 50 and as a human being, you will be afraid of what your life will be like after retirement. It is not easy for you to earn salary for 31 years and all of a sudden, it just ended.  You will be happy that God saw you through, but the other feeling that you will have is to face the reality. But I am particularly happy because I am sure that under the new pension arrangement, my pension will be paid to me monthly.”

    Mr. Bola Durojaiye, who retired from Surulere Local Government in 2102 after serving for 16 years, believes the new pension scheme is a departure from the past agreement which is what makes it easier and better.

    “We thank whoever is behind this arrangement and we believe they will still develop it to become better so all we are doing is to pray for the governor and for everyone that has made an impact in the Scheme.

    “I am very happy today because I retired in October 2012 and we are in April, today, in less than two years, he added.

    Mrs. Jesse Okonkwo, who served in Banjo Primary School, Ebute Metta, said she worked for Lagos State for 25 years and Anambra for six years before retiring.

    She said Lagos paid her pension for 25 years and asked her to return to Anambra to receive the balance.

    “They paid me for 25 years and asked me to go to Anambra to collect my remaining pension and that has been stressful for me. I am not happy that my own state is not doing much. Lagos is really trying for us and I just wish I finished my service here in Lagos.

    Earlier, the Acting Director-General of PenCom, Mrs. Chinelo Anohu-Amazu, had said the South-west geo-political zone of Nigeria, comprising Ekiti, Lagos, Ogun, Oyo, Ondo and Osun states, are leading other political zones in the country when it comes to complying with provisions of the Pension Reform Act 2004 and the CPS.

    She said all the states in the zone have enacted their own versions of the pension reform law to enable them establish a contributory pension scheme for civil servants at both states and local governments.

    She said some states in the zone have started deducting pension contributions from their workers’ salaries monthly and remitting same into their RSA domiciled with their preferred PFA.

    She said: “Lagos State has remained special in this regard, being the first state to embrace contributory pension. The state enacted a law that enabled it to start implementing the scheme in 2007, prompting PenCom to locate its zonal office within the state.

    “Indeed, Lagos State by our record, is one of the pioneers in the implementation of the CPS, having enacted its law in 2007. Lagos State is fully compliant with its employees’ registered and pension contributions’ remittance paid regularly. It also issued retirement benefit bonds to its retirees and these bonds have been fully redeemed and proceeds paid into the RSAs.”

    Mrs. Anohu-Amazu said Anambra State only recently enacted its pension enabling law. It is expected that the state would soon set up the administrative structure, appoint PFAs and register its employees under the Scheme, she said.

    She explained that the Pension Reform Act 2004 is meant to address old age, poverty and the sufferings of retirees while accessing their pension.

    The law sought to ensure that every person who has worked in either the public, or private sector gets their pension as and when due; establish a uniform set of rules and regulations for the administration and payment of retirement benefits in both the public and private sectors, among other things, she added.

  • New pension bill will protect assets, says PenCom

    New pension bill will protect assets, says PenCom

    Expectation is high in the pension industry following the passage of the new pension bill by the Senate.

    Acting Director-General of the National Pension Commission (PenCom), Mrs. Chinelo Anohu-Amazu said when the bill is signed into law, it will enhance the protection of pension fund assets as well as unlock the opportunities for deploying the assets for national development.

    She said it will also review the sanction regime to reflect current realities and provide for the participation of the informal sector, adding that it will provide the framework for adoption of the Contributory Pension Scheme by states and local governments.

    Mrs. Anohu-Amazu who spoke with The Nation in Lagos also said in line with the joint resolution of the National Assembly to put a stop to corruption in various pension departments, the new bill will enhance the regulatory authority and efficiency of the Commission.

    This will also give the Commission opportunity to give greater oversight on, and reposition the Pension Transition Arrangement Departments (PTAD) for accountability in the administration and payment of pension under the Defined Benefit Scheme (Pay As You Go).

    With the passage of the bill by the Senate, she said the Commission is is awaiting the House of Representatives to also pass the bill.

    Last week, the Senate passed the “Pension Reform Act Cap P4 Law of the Federation of Nigeria 2011 (Repeal and Re-enactment) Bill 2014 (SB.288), sponsored by Sen. Aloysius Etok.

    The Senate, after an exhaustive debate on the bill at its Committee of the whole house voted for its passage into law and urged President Goodluck Jonathan to sign it into law as soon as possible.

    Chairman, Senate Committee on Establishment and Public Service, Senator Aloysius Etok, spoke on the penalties for defaulters under the Contributory Pension Scheme.

    Etok said the Head of Service and heads of different departments have directed all the accounting departments to make sure that whatever pension deduction made should be treated as a sacred and immediately transmitted to the receiving authority.

    The problem which PenCom has continuously encountered, according to him, is that people fail to provide genuine and credible data on themselves including their PFAs.

    He noted that there were some who have not even appointed PFAs and therefore kept deducted funds in their accounts pending when they have the data to transfer them.

    He said: “We have like buffer stock funds pending in different places. But with the enactment and passage of this bill and (when it) is assented to by the president, all the penalties and all the prescriptions contained in this Act would be followed strictly by the various agencies.

    “We have penalties ranging from 10 years imprisonment. For even failing to give proper information, you have to pay N500,000. And if you embezzle pension funds now, you will pay not less than three times the amount of funds you embezzled. That is how serious this bill has treated pension funds.

    “If you embezzle N10,000 you are bound to pay a minimum of N30,000 and in some circumstances the presiding judge has the right to make you refund and even go to prison.”

    He added that the previous pension law had some clauses and those who had embezzled pension fund before the passage of the new bill would be tried with respect to the old law.

  • Lagos to pay 426 retirees N1.62b

    Lagos to pay 426 retirees N1.62b

    Lagos State is set to pay another batch of 426 retirees their Retirement Bond Certificate worth N1.62 billion being their accrued rights for past services to the state prior to the commencement of the Contributory Pension Scheme in April, 2007, Director-General, Lagos State Pension Commission (LASPEC), Rotimi Hussain, has said.

    According to him, the retirees are those who retired from the state public service under the Contributory Pension Scheme (CPS).

    He said the retirees would receive their retirement bond tomorrow at the Nigeria Employers Consultative Association (NECA) Hall, Ikeja.

    The LASPEC chief said the ceremony, which is the first tranche of the 11th Retirement Bond Certificate presentation ceremony is a means of appreciating the retirees for showing great commitment and resourcefulness to the state government during their service years.

    He said majority of the beneficiaries of this first tranche were drawn from local government areas and State Universal Basic Education Board (SUBEB).

    He said: “The ceremony is another confirmation of the commitment of the administration of Governor BabatundeRajiFashola (SAN) to make life worthy and remarkable for all its employees in retirement.

    “The achievement so far made by LASPEC in the administration of the CPS is also a result of the commitment the state government placed on the scheme.

    “The state has so far paid a total accrued rights of N22.7billion to 4,199 retirees who retired from the public service from the inception of the scheme till date, thus making it the only state in Nigeria to have attained this status.”

  • Premium Pension, Niger sign fund’s management agreement

    Premium Pension, Niger sign fund’s management agreement

    The Niger State government has signed a portfolio management agreement with Premium Pension Limited, a Pension Fund Administrator (PFA).

    In a statement signed by Head, Corporate Communication, Premium Pension, Paddy Ezeala, the agreement confers on the PFA, the authority and responsibility of managing the state’s benefits fund named, “Retirement Redemption Bond Fund”.

    He said while the Managing Director, Premium Pension Mr. Wilson Ideva, and Executive Director, Business Development and Investment, Mr. Adamu Mele signed on behalf of the company, the Director-General of the Niger State Pension Board, Alhaji BenuYahaya Ahmed signed on behalf of the government.

    He said the fund was established by the government through the Niger State Pension Board and has been endorsed by the National Pension Commission (PenCom).

    The fund emphasises, among others, that the funds and assets held in them must be managed in accordance with the guidelines issued pursuant to the Pension Reform Act 2004 and also accords Premium Pension the responsibility of the lead PFA in the state.

    Speaking on the development, Ideva said: “This is a practical demonstration of mutual trust and highly productive partnership required to drive the contributory pension scheme in the country.

    “We must continue to justify the confidence reposed in us by the Niger State government through rendering quality service marked by high level of professionalism.

    “The agreement states clearly that the appointment of the PFA shall be of a fiduciary nature consistent with the requirements of the law and that it shall exercise utmost duty of care and good faith in all their undertakings under the terms of this agreement.”

    Other officials of the Niger State Pension Board present at the event include permanent member, Finance, Investment and Inspectorate, Alhaji Mohammed Ndagi, and Mr. Mohammed B. Abdullahi, the board secretary and legal adviser respectively.

  • Detroit proposes deeper pension, bond cuts in debt plan

    Detroit proposes deeper pension, bond cuts in debt plan

    Detroit, the biggest city in the United States is seeking bankruptcy protection, proposed deeper cuts for police and firefighter pensions, as well as for some bondholders, as it pursues approval of a plan to reduce its $18 billion in debt.

    The city yesterday filed a description of its debt-adjustment plan that differs in some details from what it submitted in February in US Bankruptcy Court in Detroit.

    The disclosure statement, if approved by US Bankruptcy Judge Steven Rhodes, will be consulted by creditors in deciding whether to back the plan.

    Detroit filed for bankruptcy in July, saying it couldn’t meet its financial obligations and still provide necessary services. The city has since been in negotiations over cuts with unions, retired workers and bond insurers.

    General obligation bondholders, who had been set to receive 20 cents on the dollar under February’s plan, are now projected to get 15 cents.

    Pensions for police and firefighters would be cut about six percent if they vote for the plan, 14 percent if they don’t. In February, those proposed cuts were four percent and 10 percent respectively.

    The office of Kevyn Orr, the city’s emergency financial manager, said in a statement yesterday that the new numbers were included to offer “greater clarification for retirees on how much pension benefit reductions would be.” The statement didn’t say why the numbers had changed.

    Previous Proposals

    The new disclosure statement also incorporates proposals the city previously announced, including a plan to spend $1.5 billion to improve services and a proposal for foundations and the state to put more than $800 million into pension funds in exchange for a promise that art owned by the city wouldn’t be sold.

    Absent a deal with creditors, the city may have to battle unions, retired municipal workers, bondholders and bond insurers to win approval of the plan in court. The unions have asked an appellate court to dismiss the bankruptcy, while insurers have sued over proposed cuts to general-obligation bonds and retirees have said the pension cuts may push many of them into poverty.

    Detroit, meanwhile, has sued to void $1.44 billion in pension-related debt. Also, Orr is attempting to lease the city’s water and sewer department to a new regional public authority, a plan suburban leaders have resisted.

    A hearing on the disclosure statement is set for April 14. A trial on plan approval has been scheduled for July.

  • ‘New pension scheme’ll eradicate corruption’

    ‘New pension scheme’ll eradicate corruption’

    The Contributory Pension Scheme (CPS) would eventually end corruption in the country if the law guiding its operation are adhered to, Managing Director of Premium Pension Limited, Mr. Wilson Ideva has said.

    He spoke at the Pension Fund Administration Summit for Education Ministries, Agencies and Institutions organised by Exam Ethics Marshals International in Lagos at the weekend.

    He said people steal what they do not need for fear of the unknown.

    According to him, the scheme has provided an umbrella that guarantees decent life for workers on retirement and secures a large pool of funds that could be deployed to national development.

    He said the tremendous successes recorded by the industry in a short time would encourage workers to do their jobs honestly in the expectation that their future would be guaranteed.

    He averred that the funds could be used to hold down inflation and fix the country’s infrastructure gap.

    Ideva described the new scheme as an ‘unsung revolution’ adding that more than N4 trillion is already being managed under the scheme even when only six million out of the estimated 70 million workforce have embraced the scheme.

    He said: “What would happen if only a quarter of workers enlist in the scheme? There should be a signpost on every project executed with pension funds indicating the source of the funds to make Nigerians aware that the pension scheme has already begun to contribute to national development.

    The Head, Research and Corporate Strategy Department, PenCom, Dr. Farouk Aminu, represented by the commission’s Secretary and Legal Adviser, M. S. Mohammad, said: “The contributory pension industry can no longer be ignored as it has proved to be a veritable platform for attaining the Federal Government’s Transformation Agenda.”

  • UK pensions make top 10 in global index

    UK pensions make top 10 in global index

    Sustainability of Britain’s pensions system has improved as millionth member joins largest auto-enrolment scheme

    Reforms, such as the introduction of auto-enrolment took the United Kingdom (UK) up the rankings in the Allianz Global Investors Pension Sustainability Index (PSI), introduced in 2009, from 12th place in 2011 to 10th in 2014.

    Auto-enrolment was launched in 2012 and it is being rolled out to more and more employers. By 2016, all workers will automatically be put into a scheme and will save an eventual eight per cent of their earnings.

    The National Employment Savings Trust, (Nest), set up by the government to provide auto-enrolment schemes to companies without their own, has just passed the one-million-member landmark.

    The Allianz report also cited the sweeping changes to accessing pensions announced in last month’s Budget.

    Head of Pensions, Europe at Allianz Global Investors, Andreas Hilka, said: “With the introduction of Nest, a simple yet sophisticated auto-enrolment scheme, the UK took an important step towards enlarging the share of people saving for their retirement.

    “Further reform is clearly on the agenda, as the overhaul of the annuities market and the decision to cap auto-enrolment charges show.”

    Australia takes the top spot in the latest rankings, with its two-tier system of lean public and highly developed funded pensions putting the country under the least pressure to reform. Australia is followed in order by Sweden, New Zealand, Norway and the Netherlands in the tables.

    The report said western European countries benefited from their “comprehensive pension systems based on strong, funded pillars”. Sweden and Norway scored well thanks to their “comparatively solid public finance situation”, with Norway’s high legal retirement age and moderately ageing population also helping the country to a high ranking.

  • Stanbic IBTC Pension chief urges early retirement planning

    Stanbic IBTC Pension chief urges early retirement planning

    A Call has been made for early retirement planning.

    The Chief Executive Officer, Stanbic IBTC Pension Managers Limited, Dr. Demola Sogunle, made the call during the inauguration of the second phase of the firm’s interactive pre-retirement seminar in Abuja, which had the theme, Life renewed at 55 and beyond.

    According to him, the pension system, with defined contributions as its foundation, presents a path for employees to maintain a stable standard lifestyle well after retirement.

    He said: “We have taken our drive for retirement planning to Abuja, the Nigerian capital, with a call to Nigerians to understand the importance of early retirement planning. We believe that raising awareness of retirement would help companies and their employees in particular to better understand the imperative of retirement planning.

    “People are apprehensive about retirement because they do not plan for it early enough. Ideally, planning for retirement should commence from the day one takes on a first job.  It demands setting aside part of current income into a retirement savings account. Our central mission at Stanbic IBTC Pension is to help Nigerians address their retirement needs.”

    He said the event provides a platform for the firm to forge closer ties with customers and enlighten the public on developments in the industry.

    ”In addition to creating awareness about the necessity of having a retirement plan and enjoying a comfortable life post-retirement, another objective of this campaign is to further deepen the relationship with our customers by reminding them of our availability at anytime and anywhere to attend to their needs.

    “In so doing, we obtain significant feedback with which to develop solutions that address their specific needs. This will not only put them at ease; we are also motivated to go the extra mile to deliver on our promises,” Sogunle added.

  • Pensioners seek upward review of returns on savings

    Pensioners seek upward review of returns on savings

    Subscribers to the Contributory Pension Scheme (CPS) are seeking an upward review of the returns on their investment (RoI).

    Those making the call are retired public servants whose salaries are usually low compared to their counterparts in the private sector.

    A pensioner, who retired as a Director from a Federal Government ministry, Mrs Aduloju, is not happy because what she is receiving as pension under the scheme is not enough to meet her basic needs unlike when she was still in service and earning salary.

    She wants the RoI reviewed by Pension Fund Administrator (PFA) and the National Pension Commission (PenCom).

    She said: “I retired in 2013 after serving for 33 years. I am receiving a monthly pension of between N50,000 and N70,000 from my last salary of N450,000 as a director.

    “I think the system should be reviewed because we are getting so much less. The old pension scheme was very clear because you know what you will get as pension based on your number of years in service.

    “By a certain formula, you will know how much you are getting as your gratuity. It was very open. Now we are told that there is a template. What is the template? And if after service of 33 years I am getting N50,000 or even N70,000 per month from my last salary of N450,000 as a director and with the Nigerian situation, it is nothing to sustain me.

    “The old pension scheme paid better, but it is the human factor problem associated with it that did not make it work as it should have.  The new scheme is paying us less and this should not be the solution to pension adminstration in the country. I believe it should be reviewed so that pensioners could begin to receive more as this would encourage workers to look forward to retirement.”

    Another Federal Government pensioner, who also craved anonymity, lamented that what she gets is not enough to cater for her needs in old age.

    The woman, who retired in 2010 after 35 years, said: “If PenCom and PFAs (Pension Fund Adminsitrators) really want us to be happy after retirement, they should find a way of ensuring that we get good return on our investment.

    “How do they want us to survive on this stipend they are paying? I earned N400,000 before I retired as a senior public servant and now they are giving me N50,000. Suppose I live for 30 years before I die, it means all I get after retirement is N1.5 million. This is not a fair deal,” she said.

    A senior official in PenCom who spoke with The Nation on investments said the reason some ex-workers earn low pension is because many of them request to have their PFA pay them over 50 per cent lump sum from their Retirement Savings Account (RSA).

    This reduces the amount they will receive as monthly or quarterly pension because they have received a huge part of the money as a lump sum, he said.

    He advised retirees to take a low lump sum so that their monthly pension can sustain them.

    He, however, noted that the commission was working on mechanisms to enable the PFAs invest outside the country with guarantee that contributors pension would be safe.

    He added that this and some other issues were being considered to boost returns for contributors.

    According to the General Principles in the ‘Guidelines on Regulation of Investment Of Pension Fund Assets’, PFAs shall invest pension fund assets with the objectives of ensuring safety and maintenance of fair returns; shall recruit and retain highly skilled personnel in their investment departments; shall not invest Pension Fund Assets in instruments that are subject to any type of prohibitions or limitations on the sale or purchase of such instrument, except for open/close-end/hybrid funds and specialist investment funds allowed by this Regulation.

    “PFAs shall not trade on margin accounts with pension fund assets, shall not engage in borrowing or lending of pension fund assets and shall not trade in financial instruments with pension”.