SHITTU: Good day, my name is Shittu. My complaint is on the issue of 2.5 per cent approved for contributory pensioners by President Muhammadu Buhari. PenCom and PFAs’ insist that those with N100,000 and below should be paid directly and others entitled to above the amount should be withheld and such amounts should be put on trade either on Annuity contract or Programmed withdrawal.
The implication is splitting of amounts in excess into several months and years, thereby leaving pensioners being paid mere pittance rendering the purchasing powers meaningless to the old, poor, sick and weary pensioners that need these funds for the purchase of essential drugs to take care of themselves. The wisdom behind these directives/guidelines is both not understandable and comprehensible in view of the dwindling life expectancy of the various pensioners affected. While some are in the mid-way of the guaranteed 10 years for both annuity and programmed withdrawal schemes, pensioners are not being allowed to enjoy their money and fruits of their labour while alive, healthy and fit. In juxtaposition with those old pensioners being paid under Defined Benefit Scheme, it is evident that no matter the amounts these categories of pensioners are entitled to; they are paid into their bank accounts. What is sauce for the goose is also sauce for the gander. This is despite the glaring fact that the Federal Government and PenCom that is expected to make advocacy for it, since the inception of the scheme had not deemed it fit to increase, enhance or give palliatives to contributory pensioners even at the various salary increases by the Federal Government to workers that had taken place. This provision of Contributory Pension Act 2004 (as amended) had never been implemented for contributory pensioners. We appeal to the PenCom and the Federal Government to save our souls.
PENCOM: Please note that only retirees on Programmed Withdrawal that have an appreciable growth – due to investment income in their Retirement Savings Accounts (RSA) are eligible for pension enhancement. The investment income was utilized (if any) to enhance the pensions of the eligible retirees. There have been two enhancement exercises by the Commission. The first beneficiaries were those pensioners that retired from July 2007 to December, 2014, using their RSA balances as at December 31, 2016, but the effective date of the enhancement was December 2017. The Pension Enhancement would be a regular three years’ exercise to be conducted upon approval of the Commission. The last pension enhancement was carried out from November 2020.
- Please note that the recent remittance of the 2.5 per cent shortfall of employer contributions were strictly for employees of the FGN Treasury Funded MDAs as a result of the provisions of Section 4 (1) of the Pension Reform Act (PRA) 2014.
- You would also note that a Framework and Additional Benefit Template (ABT) was issued by the Commission in July 2018 for processing of benefits following additional remittances into the Retirement Savings Accounts (RSAs) of retirees. In the processing of the additional benefits, the current RSA balances are added to the new remittances and the total amount is re-programmed using the age of the retiree. The additional contributions shall be treated in line with the following as stipulated in the Framework on Additional Benefits:
- Section 6.6 – Where additional benefits are made into the RSA of a retiree who is not receiving up to 50 per cent of the final salary as Pension, the PFA shall augment his pension up to 50 per cent of the final salary with the additional remittance, before consideration for any lump sum.
- Section 6. 7 – Where additional benefits are made into the RSA of a retiree who is currently receiving 50 per cent of his final salary as pension, and is less than 65 years old, the PFA shall augment his pension by 30 per cent of his current pension and the residue may be considered as additional lump sum to the retiree.
- Section 6.8 – Where additional benefits are made into the RSA of a retiree who is currently receiving 50 per cent of his final salary as pension, and is 65 years and above, the PFA shall augment his pension by 10 per cent of his current pension and the residue may be considered as additional lump sum to the retiree.
- Further to the above, Section 4.3.1 (a and b) of the Revised Regulation on Retirement and Terminal Benefits stipulates that:
- A PFA shall use the Additional Benefits Withdrawal Template to compute the new pension and lump sum (if any), using the RSA balance of the retiree after the additional remittance(s).
- The additional remittances shall first be applied to augment pension up to 50 per cent of the retiree’s final salary and the balance may be paid out as lump sum. Where the retiree’s pension is already up to 50 per cent of final salary, the retiree may choose to collect the entire additional remittances as a lump sum.
- Hence, retirees on Programmed Withdrawal (PW) who would have increases in their pensions following the remittance of the 2.5 per cent additional contributions shall be treated in line with the Revised Regulation as stated above.
- However, for retirees who are on PW and may not have an increase in their pension following the remittance of the 2.5 per cent additional contributions, the additional amount shall be processed using the ABT without adding the current RSA balance. That would produce an additional pension payment over the remaining expected life of the retiree. This amount would then be added to the current pension of the retirees to give their new monthly/quarterly pension.
- Similarly, for retirees on Annuity, the provisions of Section 5.1.23 and 5.1.24 of the Revised Regulation on Retiree Life Annuity shall continue to apply i.e those with additional remittances of less than N100,000 should be paid enbloc while those with N100,000 and above shall get additional Annuity quote for the entire amount to enable the PFA transfer same to the Retiree Life Annuity Provider for additional monthly/quarterly annuity. Sections of the Regulation as specified below: •Section 5.1.23 – The PFA shall remit such additional inflow directly to the retiree’s bank account where the sum is not more than N100,000.
- Section 5.1.24 – The PFA shall advise the retiree to obtain an RLA Provisional Agreement to transfer the amount to his RLA Provider as premium for the purchase of additional annuity where the sum is more than N100,000.