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Tag: CPS

  • Over 100,000 workers retire under CPS

    Over 100, 000 workers have retired under the Contributory Pension Scheme (CPS).  This was made known by the National Pension Commission (PenCom) in a report made available to reporters in Lagos.

    The report showed that while about 90.41 per cent of the retirees opted for Programmed Withdrawal method of collecting periodic pensions including those who   retired   on   health   grounds, about 9.59 per cent went for Annuity.

    Programme Withdrawal refers to withdrawals of funds on a regular basis, which may be monthly, quarterly, among others. As an RSA holder upon attaining statutory retirement age of 60 or age 50 and opts to retire, whichever way, the person can request for the balance in your Retirement Savings Account (RSA) to be paid out to you via programmed withdrawals.

    You can also withdraw money from your Voluntary Contributions (VC) via programmed withdrawals. The withdrawals will however be subjected to Personal Income tax where it is made before the end of five years from the date the voluntary contribution was made.

    An annuity is a series of fixed payments paid at regular intervals over the specified period of the annuity.

    Meanwhile, the  commission said that a total number of registered participants   in the CPS is about seven million employees.

    The report stated that the public sector accounts for a proportional contribution of about 48.69 per cent, while   the   private sector accounted for more than 51.31 per cent.

    It read: “The CPS has simplified the process of payment of retirement benefits through the issuance and implementation of effective regulations and guidelines.

    “The  regulation  requires  employees   to commence   the  process of  accessing   their  benefits  six  months  before  the  date  of their  retirement. This allows for smooth transition   into retirement   life as retirement benefits are currently paid as and when due.”

  • CPS: 18% contribution rate increases employment costs

    CPS: 18% contribution rate increases employment costs

    The increase in employer’s compulsory contribution rates from 7.5 per cent to 10 per cent in the Contributory Pension Scheme (CPS) as required in Section 4 (1) (a) of the Pension Reform Act (PRA) 2014, has significantly increased the employment costs, an Actuarial Scientist and Chartered Insurer, Dr. Pius Apere has said.

    Apere, who is also the Deputy Managing Director of Linkage Assurance Company Plc, made this known in a report made available to journalists in Lagos and titled: “The Implications of PRA 2014 on Management of Private Sector Gratuity and Pension Schemes”.

    The expert said that due to affordability, companies may need to review the levels and design of their total employee benefit packages like gratuity schemes.

    He pointed out that this review would pose a greater challenge to employers without an actuarial input.

    According to him, the statutory regulation, PRA 2014, does not give any guidelines on pension scheme valuation method leaving the choice of valuation method at the discretion of the actuary.

    He said this has led to non-standardisation of valuation results, which makes peer reviews and comparative analysis quite impossible for regulatory purposes.

    He explained that employers operating unfunded (PAYG) gratuity schemes tend to use the book reserving methodology being the most appropriate valuation method for unfunded schemes

    He noted that this requires making provisions in the company’s accounts for unfunded benefit liabilities payable in the future for which no funds have been set aside, adding that the balance sheet of the company will show the full value of the unfunded benefits as liabilities of the company and there will be no specific assets earmarked to provide the benefits.

    He stressed that the challenges of book reserving are insecurity of reserves, liquidity problems, overstatement of profits for taxation and insecurity of benefits.

    He said: “The major stakeholders, namely sponsors, regulators and operators require actuarial services in order to effectively manage the private sector gratuity and pension schemes. Regulators require that defined benefit –gratuity or pension schemes must always have appropriate and adequate assets available to pay the benefits. The financial assessment framework which defines the statutory funding objective, is normally part of the Pensions Act and sets out the requirements for the financial position of a gratuity or pension fund.

    “A gratuity or pension fund’s financial position is reflected largely by the coverage ratio. This expresses the relationship between the fund’s assets and the liabilities to be paid in the future. There should be a minimum coverage ratio. For instance, 105 per cent, that is, the assets must amount to 105 per cent of the liabilities.

    “However, Section 50 (2) of PRA 2014 only specifies that any defined benefits scheme in the private sector shall undertake an actuarial valuation to determine the adequacy of the pension fund assets, but without stating clearly the level of adequacy. For instance, there was no minimum coverage ratio required which is a regulatory challenge. The above implies a minimum coverage ratio of 100 per cent. (i.e. the assets must amount to 100% of the liabilities which no doubt is likely to create an insolvency risk for private sector schemes, particularly when there is volatility in the financial market.

    “In addition to the minimum coverage ratio, a gratuity or pension fund must also hold enough buffers to be able to cope with financial setbacks or volatility in the financial market. The size of these buffers depends on many factors, but for an average gratuity or pension fund the required coverage ratio including the required buffers is approximately 125 per cent. On average, the greater the investment risks and the higher the average age in the gratuity or pension fund, the higher the buffer requirements.”

    Apere added that the determination of the level of buffers is a task that requires actuarial techniques, having considered the risk appetite of the scheme.

  • N3.89tr funds: PenCom urges state governments to join CPS

    N3.89tr funds: PenCom urges state governments to join CPS

    The National Pension Commission has advised state governments that are yet to join the Contributory Pension Scheme (CPS) to do so to enable them benefit from the N3.89 trillion pension fund available for infrastructure and housing as at September this year.

    Its Director-General, Mrs. Chinelo Anohu-Amazu gave this advice while briefing the National Executive Council (NEC) at the Presidential Villa on the level of state government compliance with the scheme. In attendance were the 36 state governors of the federation  at the briefing chaired by Vice President, Prof Yemi Osinbajo.

    She however identified funding challenges, non-enactment of pension laws and resistance by state officials on consolidated salaries as major challenges and issues that must be dealt with to enable the states implement the CPS and comply with the Pension Reform Act (PRA) 2004 repealed by PRA 2014.

    She said other problem facing the states in the implementation of the CPS are the resistance by the organised labour due to low pension pay-out and absence of credible payroll.

    Anohu-Amazu who said the pension funds as at September stood at N5.103trillion noted that N3.899 trillion remains untapped potential available for infrastructure and housing.

    She listed process for accessing the funds for infrastructure as full implementation of the CPS and execution of Irrevocable Standing Payment Order (ISPO) to the Accountant-General of the Federation to deduct pension contributions and funding for accrued rights at source.

    She further said opportunities for states to join the CPS also include access to available RSA funds for infrastructure which she described as an efficient avenue for financing states’ long term borrowing needs such as corporate bonds.

    It also include access to RSA balances for affordable housing schemes by state employees, she added.

    She noted that pension assets totaling N160 billion have so far been invested in state bonds towards infrastructure development.

    She called on states to take steps towards full implementation of the CPS.

    She said: “States should begin to take steps towards full implementation which include urgent enactment of State Pension Laws, establishment of State Pension Bureux to drive implementation of the CPS; commencement of actuarial valuation to determine accrued rights of employees; opening of RSA for eligible employees and issuance of retirement benefit bonds to eligible employees.

    “Others are opening of Retirement Benefit Bond Redemption Fund Account (RBBRFA) with either the Central Bank of Nigeria (CBN) or a Pension Fund Custodian (PFC); adequate funding of the RBBRFA; consistent remittance of both employer and employee pension contributions; deployment of robust ICT to facilitate implementation efforts and institution of Group Life Insurance for employees.”

    She enjoined the states to comply fully with the scheme stating that the Commission would continue to collaborate with them to achieve full implementation.

    Speaking on safeguards of the CPS, she said it entails meticulous investment limits and risk rating, segregation of pension funds from assets of operators, daily, monitoring of investment of pension funds, guarantee from the parent company of PFCs and mandatory statutory reserve requirements for PFAs.

     

  • Ondo to begin CPS with 18% contribution increase

    Ondo State is set to begin the implementation of the Contributory Pension Scheme (CPS) with 18 per cent pension contribution increase, Director-General, Ondo State Pension Commission, Jayeola Olowosuko has said.

    Olowosuko made this known in an interview with The Nation in Lagos.

    According to him, the state has set October as the month when deduction of monthly contribution will commence.

    He explained that the state had partly joined the scheme as it has been deducting and remitting monthly contributions of its employees of 2014.

    He said the state was not able to implement the scheme before now due to economic challenges, adding that the Pension Reform Act (PRA) 2014, which repealed the PRA 2004 was also promulgated when the economy had issues.

    He added that it became necessary for the state to plan how to join the scheme in phases so that workers are not put in financial crisis.

    He said that overtime, the state has been owing staff and has been paying salaries in arrears.

    He noted that the problems of nonpayment of salaries has come to an end as the state has just paid September salaries in October.

    He said: “The new pension law was promulgated when the economy had issues and so we had issues implementing the scheme fully. Workers already had financial pressures and we didn’t want to put them through any financial crisis.

    “We have however been sensitising them on the scheme. Presently, things are getting back to normal and they are now ready to join the scheme.

    “We have therefore, pegged October date as when we will begin deductions from their salaries while we also remit same to their chosen Pension Fund Administrators”, he added.

  • Partial implementation of CPS by Southsouth worries PenCom

    Partial implementation of CPS by Southsouth worries PenCom

    The National Pension Commission (PenCom) has expressed worry over the partial implementation of the Contributory Pension Scheme (CPS) by states in the Southsouth geopolitical zone of the country.

    The commission however, said despite this development, the pension scheme under the CPS has generated N5.03trillion worth of pension assets invested in various sectors of the economy.

    Its Director-General, Mrs. Chinelo Anohu-Amazu who spoke during the Southsouth sensitisation conference on the impact of the Pension Reform Act 2014 in Uyo, Akwa Ibom State capital, said the partial implementation of the scheme in the zone has denied them of the advantages that came with full compliance.

    Represented by the Commissioner, Inspectorate of the commission, Prof. Mohammed Ka’oje, she said the scheme also makes available for the benefit of states a pool of investible  funds to drive economic and infrastructural development in their respective areas.

    She said: “It is heartwarming to note that within a decade of the implementation of the scheme in Nigeria, the story of pension administration is changing into a positive narrative; the scheme has so far delivered all the major objectives of the reform.

    “We are proud to state that since its establishment 11 years ago, there had been no case of malpractice recorded in the administration of the Contributory Pension Scheme in Nigeria.

    “In addition, the scheme has so far generated over N5.03 trillion worth of pension assets invested in various sectors of the Nigerian economy as at date.”

    She said the scheme has delivered all the major objectives for which  the reform was set to acheive.

    She, however, appealed to all the states and local governments in the Southsouth region to step-up  efforts at implementing the scheme in order to avail themselves and their employees the opportunities the scheme offers.

    Speaking on the occasion, Akwa Ibom State Governor, Mr. Udom Emmanuel, who was represented by his deputy, Mr. Moses Ekpo, said the upward review of the scheme, had introduced minimum contribution rate from 15 per cent to 18 per cent from monthly emolument.

    He said this will empower all employers to contribute 10 per cent, while the remaining eight per cent is made by the employee.

    According him, the Reform Act also made it mandatory for employers of labour to open a Temporary Retirement Savings Account, on behalf of its employees who failed to open such account within three months after being employed.

    He said the Pension Reform Act  2014 has criminalised the practice  of misappropriation of pension funds by public officials.

    He said: “Again, it must be put on record that in the recent past, where certain public officials indulged in wanton misappropriation of pension funds, these are acts that are both criminal in nature as well as evil in intention, as they not only deprive hard-working citizens of this country from accessing their due benefits, but further aggravates frustration among such individuals.

    “This is the height of man’s inhumanity to his fellow man, even as it amounts to a crime against the state. “This is more so because pension is a reward for all the toils and sacrifices of the working man and woman.”

  • Window for CPS retirees to change their PFA coming

    Window for CPS retirees to change their PFA coming

    Workers and retirees under the Contributory Pension Scheme (CPS) who desire to change their Pension Fund Administrators (PFAs) may soon be able to do so.

    This was made known in a report obtained by The Nation from the National Pension Commission (PenCom).

    According to the report, the PenCom has identified the major challenge hindering the opening of the transfer window which is meant to allow workers and retirees transfer their account from one PFA to another.

    Section 13 of the Pension Reform Act, 2014, provides that, “Subject to the Guidelines issued by the Commission, a holder of a Retirement Savings Account (RSA) maintained under this Act, may not more than once a year, transfer his account from one Pension Fund Administrator to another.”

    The report said in line with the provisions of the Act, the Commission has already released the regulations for the transfer of RSA to pension operators and also exposed same on its website.

    The Commission explained that a major challenge hindering the opening of the transfer window is the issue of RSA holders registering more than once through their PFAs on the Commission’s database.

    For effective take off of the transfer window, the Commission said it is putting in place infrastructure and modalities that would enable the cleaning up of the existing registration database to eliminate multiple registration thereby facilitating the opening of the transfer window.

    The Commission however implored all stakeholders to exercise patience as the window would be opened in due course.

  • CPS: Workers to access mortgage with 25% RSA balance

    CPS: Workers to access mortgage with 25% RSA balance

    Are you a contributor under the Contributory Pension Scheme (CPS) and a retirement Savings Account (RSA) holder?

    If your answer is yes, then you may soon be able to access up to 25 per cent of your RSA balance and utilise as equity contribution for a residential mortgage loan.

    Twenthy-five per cent of your RSA balance will enable you to access a mortgage loan of between N1.5 million and N50 million.

    This was contained in the draft guidelines on withdrawals from Retirement Savings Account (RSA) towards Equity Contribution for Payment of Residential Mortgage released to the public by the National Pension Commission (PenCom).

    Section 89 (2) of the Pension Reform Act (PRA) 2014 provides that a Pension Fund Administrator (PFA) may, subject to guidelines issued by the 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 Retirement Savings Account (RSA).

    Pursuant to the referenced Section 89(2), these guidelines provide the framework for its implementation. It seek to provide the operational modalities for PFAs in determining the eligibility requirements, procedures and documentation required to enable RSA contributors to access and utilize part of their RSA balances towards equity contribution in respect of first home ownership mortgages.

    Meanwhile, a RSA holder shall access a portion of the RSA balance as equity contribution for residential mortgage, only once in a lifetime and may not be entitled to a lump sum payment at retirement.

    The guideline however favors insurance operators as it requires that the property to be purchased by a RSA shall have comprehensive insurance policy in the name of the borrower, to cover the replacement or reinstatement cost of the property. The insurance policy must note the RSA Fund as one of the first loss payees, to cover the equity contribution released by the PFA.

    The general principles in the guideline to access RSA Balance reads: “All applications by RSA holders to access and utilise a percentage of their RSA balances as equity contribution for mortgage loans shall be approved by the Commission.

    “A RSA holder shall access a portion of the RSA balance as equity contribution for residential mortgage, only once in a lifetime. He or she shall make a formal application to the PFA requesting for a portion of the RSA balance as equity contribution for a mortgage loan.

    “A RSA holder that has utilized a portion of the RSA balance as equity contribution for residential mortgage may not be entitled to a lump sum payment at retirement. An eligible RSA holder shall be allowed to access a maximum of 25 per cent of the RSA balance as equity contribution for a mortgage loan.

    “The RSA balance shall be the Value of an Accounting Unit of the Fund (VAUF) of the RSA Fund multiplied by the accounting units held by the RSA holder as at the date the application was received.”

    The guideline further reads that in order to qualify to access the RSA balance as equity contribution for a mortgage loan, the RSA holder must be in active employment, either as a salaried employee or self-employed person.

    He or she must have been contributing consistently for a minimum of 10 years, prior to the application for drawdown.

    “The RSA holder’s Debt to Income ratio shall not exceed 33.33 per cent of his or her net monthly income at the time of applying for the mortgage. The RSA holder’s debt shall be the sum of the monthly mortgage repayments and other personal debt obligations that impact on his monthly income.

    “The RSA holder shall provide the required documentation as required under Section 5.0 and, or other additional documentation requested, from time to time.

    The guideline also read: “An eligible RSA holder shall use the proceeds of the mortgage loan to purchase either a single-family home or an apartment in a multi-unit building, which must be owner-occupied. The title to the property must have a fully perfected title and free from any encumbrance.

    “The property shall have comprehensive insurance policy in the name of the borrower, to cover the replacement or reinstatement cost of the property. The insurance policy must note the RSA Fund as one of the first loss payees, to cover the equity contribution released by the PFA.

    “The valuation of the property to be purchased with the mortgage loan shall be carried out by a licensed, independent valuer who is a member in good standing with the Nigerian Institution of Estate Surveyors & Valuers (NIESV) and must carry Professional Indemnity Insurance with an insurance company licensed and in good standing with National Insurance Commission (NAICOM).

    “The mortgage loan amount shall be a minimum of N1.5Million and a maximum of N50Million and the tenor shall be for a minimum of five years and a maximum of 20 years.”

  • Okorocha swears in SSG, CPS, others

    Okorocha swears in SSG, CPS, others

    IMO State Governor Rochas Okorocha yesterday swore in the Secretary to the State Government (SSG), Sir Jude Ejiogu, and four others. The others are: the Chief, Uche Nwosu, Senior Special Assistant on Special Duties, Emma Ibediro and Senior Special Assistant on Assets and Liabilities, Elthel Ibebuchi and the Chief Press Secretary, Sam Onwuemeodo,.

    Okorocha advised the officials to settle down to wirk for the people. Okorocha tells SSG, others:

    “A moment like this calls for sober reflection; it is not a time to be carried away by the euphoria of the moment. To whom much is given, much is expected. Today’s responsibility has fallen on your shoulders; the people expect much from us and we must hurry to deliver the dividends of democracy.

    He urged their friends and family members to refrain from making unrealistic demands, adding: “Corruption in public offices is often as a result of pressure from family members”.

    Responding on behalf of others, Ejiogu described their appointment as a mark of honour.

    He said: “Since our appointment is a mark of acceptance, I pledge on behalf of my colleagues that we will do you proud. Imo is in critical times because we are moving into a period of consolidation.

    “We are determined to follow you to ensure that we achieve the industrial revolution, which is the main thrust of your second term”.

     

  • Aprill 11 Polls: IGP redeploys 20 AIGs, CPs

    Aprill 11 Polls: IGP redeploys 20 AIGs, CPs

    • Special forces for Rivers

     

    The Inspector General of Police IGP Suleiman Abba has deployed Assistant Inspectors-General of Police and Commissioners of Police to supervise the gubernatorial and State Houses of Assembly elections in different states.

    This deployment is in addition to the deployment of six Deputy Inspector-General of Police to coordinate Police activities in the six geo-political zones.

    Also, due to the volatile nature of activities in Rivers, Special Forces have been deployed to oversee electoral activities in the State.

    This is contained in a statement Thursday by the Force Spokesman, Emmanuel Ojukwu.

    According to the statement, the 16 AIGs affected by the deployment are: “AIG Usman A. Gwary – Abia State, AIG Olufemi Adenaike – Kwara State, AIG Mbu J. Mbu – Ogun State, AIG Patrick Dey Dokumor – Kaduna State, AIG Tambari Y. Muhammed – Jigawa State, and AIG Mohammed Jinjiri Abubakar – Gombe State.

    Others are: “AIG Ikemefuna R. Okoye – Oyo State, AIG Tunde Ogunsakin – Rivers State, AIG Jubril O. Adeniji – Bauchi State, AIG Yerima Irimiya – Imo State, AIG Baba Adisa Bolanta – Akwa Ibom State, AIG Lawal Tanko – Lagos State, AIG Ballah M. Nasarawa – Benue State, AIG Musa Abdulsalam Daura – Edo State, AIG Aderele T. Shinaba – Plateau State and AIG Bala A. Hassan – Sokoto State.

    To ensure adequate security, four Commissioners of Police have also been deployed for election duties to the following States: CP Sam Okaula – Anambra State; CP E. J.  Ibine – Ekiti State;  CP Adamu Mohammed Enugu State; and  CP Valentine Ntomchukwu -Osun State.

    In addition to the officers, Abba also deployed Commissioners of Police to command each of the Senatorial Zones of these States; Gombe, Bauchi, Imo, Akwa Ibom, Lagos, Benue, Edo, Plateau and Sokoto.

    On the deployment to Rivers state, the following Special Units deployed are: “32 Units of Police Mobile Force (PMF), 4 Units of Counter terrorism Units (CTU), 4 Units of Special Protection Units (SPU) and 6 Crack Teams of Detectives from Force Criminal Investigation Department (FCID) and complements of Intelligence officers”.

  • LASPEC chief urges workers on CPS

    SOME workers are yet to understand the Contributory Pension Scheme (CPS), Director-General, Lagos State Pension Commission, Rotimi Hussain, has said.

    He spoke during the seventh pre-retirement seminar for the civil servants and other employees of the State Universal Basic Education Board (SUBEB), Teacher’s Establishment & Pensions Office (TEPO), Government Parastatals and Local Government staff, who are retiring from the state Public Service between January and June, this year.

    According to him, the seminar is aimed at  preparing the government’s employees on the workability of the CPS.

    He said LASPEC organises the seminar on with the state-approved Pension Fund Administrators (PFAs) and insurance firms.

    He stressed that workers should have the right knowledge to guide them into retirement.

    He said: “The state was mindful of the fact that the rudiments of the scheme had yet to be fully understood by many workers which necessitated the need for understanding in the scheme.

    “The pre-retirement seminar is aimed at assisting prospective retirees to adequately prepare for physical, emotional and financial well-being in retirement as well as afford them the benefit of being in a better position and frame of mind to build a comfortable and rewarding life in retirement.

    “Participants will, among other things, be exposed to the procedures for processing of their end of service benefits; how to monitor and ensure that their Retirement Savings Account is consistent with their 7.5 per cent statutory monthly deductions and the 7.5 per cent counterpart contributions by the employer, and also highlight the two exitoptions of the programmed withdrawal provided by the PFAs and the annuity for life provided by the insurance companies.”

    Executive Director, Technical, Mrs. Folashade Onanuga, explained that the Lagos State Pension Reform Law 2007 allows a retiree to choose from two options for his monthly pension. These are the withdrawal module of the PFAs or Life Annuity from a licensed life insurance firm.

    “Life annuity is a regular income payment (monthly or quarterly) made to a person (retiree) for the rest of his life, in return for payment of the purchase money (lump sum premium). It is provided by the insurance companies and would be paid for life with the pension guaranteed for 10 years.’’

    On the programmed withdrawal, she said it is a product of the PFAs. She said its computation is based on the template given by the National Pension Commission (PenCom), adding that the higher the lump sum, the lower the monthly pension in the programme.

    “It is a periodic (monthly or quarterly) pension payment to a retiree from the balance in his retirement savings account for an estimated guaranteed pension period or life span. PFAs owed the retirees the duty to enlighten and agree with them on the preferred withdrawal option.

    She said the process entails PFA to provide current total RSA balance, amount for lump sum and other necessary data for the purpose of generating annuity quote

    “Retiree should provide life insurance Company chosen with RSA balance less amount for lump sum and collect the quotation or provisional agreement from Life Insurance Company and submit same to his PFA as soon as possible.

    “PFA shall within seven days of receipt of application seek approval from PenCom to pay lump sum and release annuity premium. PenCom will send approval to PFA and copy Pension Fund Custodian (PFC) and the National Insurance Commission (NAICOM).

    “PFA will pay the lump sum of the retiree and transfer balance to Life Insurance Company. Life Insurance Company will issue the policy document of the retiree. Payment of monthly pension is made by standing order to the bank account of the retiree,” she said.